Business Sale Agreement: What You Can Learn From A Cannabis Shop Lawsuit

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A cannabis shop owner sold the business to Oregon weed retailer Nectar. The deal has gone to pot. See “Major Weed Retailer Nectar Hit With $4 Million Breach of Contract Lawsuit.” There are two important business sale agreement lessons to take from this dispute.

Related Article: 3 Early Warning Signs To Run Away From A Business Deal

  1. If you’re the seller, make sure you get paid enough up front that the deal is worthwhile even if it falls apart later. An agreement where you chase the bulk of the money often means you don’t get paid what you want. Or you’re working for free to keep the business afloat as part of damage control post-purchase.
  2. If you’re the buyer of a venture, be sure you’re ready to perform post-closing per the business sale agreement. In this instance, it appears both parties underestimated how long it would take for state government approval of the ownership transfer.

Related Article: How To Sell An Internet Business

An experienced business contracts lawyer can help you reduce the risk of these and other pitfalls in your business sale agreement…whether you’re the buyer or the seller.

Reputation Management: How To Avoid Scandal Because Of Breach Of Contract

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Reputation Management: How To Avoid Scandal When There’s A Breach Of ContractA professionally prepared agreement is essential to reputation management. Because it can help you avoid a PR disaster when there’s a breach of contract.

How bad can it get?

As an example, look at the lawsuit by the National Rifle Association (NRA)* against its ad agency for breach of contract. Among other things, the NRA is seeking $40 million in compensatory damages plus punitive damages. The lawsuit and related news stories will do nothing to help either party protect its reputation.

So, how do you prevent bad publicity? Here are 4 important reputation management tactics…

1. Pre-Agreement Due Diligence

Before signing a business contract, research the other party. Check to see if there is a history of lawsuits or the other party using social media to hurt another company’s reputation online. Walk away from the potential deal if there is such a history.

2. Confidentiality

The written agreement should contain confidentiality/non-disclosure provisions to protect important data.

3. Non-Disparagement

Your contract should provide that neither party will disparage the other during and after performance of the agreement. In some instances, it may make sense to include a large liquidated damages amount to be paid by a party if they do decide to denigrate the other party in violation of the agreement.

4. Alternative Dispute Resolution (ADR)

Rather than publicly airing the dispute with nasty claims and counterclaims in a lawsuit, it often makes sense for a contract to provide for confidential alternative dispute resolution. This can include mediation and binding arbitration using JAMS or AAA rules and procedures.

Other Reputation Management Contract Terms

Of course, there are other provisions that an experienced business contracts lawyer will include in your agreement for reputation management. Just make sure you put the right contract in place that protects your good name in case the relationship between the parties deteriorates. Because you can’t afford to leave business reputation management to chance.

* Disclosure – Business Lawyer Mike Young is a member of the National Rifle Association (NRA) and strong supporter of Second Amendment rights. However, he does not represent the NRA as legal counsel in this lawsuit or other matters.

Media Release: Don’t Fiji “Bomb” Your Business

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media release form modelAre you using others to promote your business without permission? When it comes to marketing your business, one of the key legal documents you’ll want in place is a media release for each person who appears in your promotional materials.

This includes photos and videos you use in advertising, customer testimonials, social media, etc.

What Can Happen If There’s No Media Release?

Because without a proper media release signed, you may end up owing a small fortune to the person whose likeness you used without permission.

For example, a grocery store got dunked for $10 million because they used basketball legend Michael Jordan’s photo in ads (he donated the money to charity).

Right now, there’s a lawsuit between Fiji Water and a model known as the photobombing “Fiji Water Girl” that’s about whether or not the company has the right to use the model’s likeness to promote their product. And it’s a mess because the company claims the only signed copy of the alleged release was apparently destroyed by the model.

Naturally, it isn’t just celebrities and models who can collect from you.

For example, a strip club used a woman’s photo, falsely implying she was one of their dancers. She sued the pants off the club.

Of course, the use without permission doesn’t have to be in a negative context for you to be liable.

Getting The Release Signed

Now it’s fairly simple to get a media release signed. And it’s easier to do it before taking photos or filming video than trying to collect signatures after the fact.

But the key is to get the right signatures for every person whose likeness you plan to use.

For example, there was an Internet marketing guru who held a seminar where he decided to sell videos of the event afterwards. Although the guru had attendee releases signed, there was a child who attended the event…and neither a parent nor legal guardian signed a media release on the kid’s behalf.

So, the guru had a choice of either paying the kid’s parents for the right to use his likeness or spend more money to have the child digitally edited out of video before selling it.

What About Stock Photography And Video?

If you’re going to use stock photos and videos, the licensing terms will govern what you can and can’t do with them in your business. Stock licensing doesn’t necessarily mean you can portray the person in the video or photo in a negative false light. And if you plan to exceed the scope of the license, you’ll want to get an additional release signed (and likely pay for it).

Where To Get A Media Release For Your Business

An experienced business contracts lawyer can prepare a media release form that’s right for your company. The terms will vary depending upon your type of business, what type of media you’re using, and whether or not you’ll be paying compensation in exchange for the release.

Top 10 Things To Do When You Set Up A Business In Texas

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set up a business in texasSo you want to set up a business in Texas? Here are the top 10 things you’ll want to do to get started…

1. Talk with an experienced Texas business lawyer. Adjust your plans based on that consultation.

2. Decide on the type of business entity you want to use to shield yourself from personal liability. Many startups choose to form a Texas limited liability company (LLC).

3. File the right paperwork with the Texas Secretary of State’s office to form your new business entity.

4. Apply for a sales tax permit from the Texas Comptroller’s office.

5. Get an Employer Identification Number (EIN) from the U.S. Internal Revenue Service (IRS). Plus, tell the IRS how you want your entity treated for tax purposes.

6. And you’ll want to apply for any other permits or licenses you may need from the state, county, city, etc. Your type of business (and its location) will determine which permits and licenses to get.

7. Set up your business’ bank accounts and apply for company credit/debit cards.

8. Select an accountant for your business. Your CPA can help you with federal income taxes — and assist you with Texas franchise tax reports.

9. Get business liability insurance. If there are two or more owners, consider key person insurance too.

10. Verify you’re running everything in your business within your new Texas LLC or other entity. For example, your business’ website should registered be in the company’s name — not an individual.

Form A Texas LLC: How To Do It Right

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form a texas llc limited liability company

The second edition of the Quick Legal Guide “How To Form A Texas LLC” by Business Lawyer Mike Young is now available.

What You’ll Find In This Quick Legal Guide

The book reveals…

  • The steps you need to take before Texas LLC formation
  • How and where to file the paperwork to form a Texas limited liability company
  • Federal and Texas state tax issues for your LLC
  • Why your Texas limited liability company should have an operating agreement — and what to include in the agreement
  • How to set up bank accounts properly for your new Texas LLC
  • 4 types of insurance protection you should consider getting for your Texas limited liability company
  • What to include in employment agreements

And the guide also contains a Quick Start Checklist plus a Resources section to save you time when setting up your Texas LLC.

Where can you get this Texas LLC formation guide?

Want to form a Texas LLC quickly? You’ll find the guide in both paperback and Kindle electronic formats at Amazon.com. Get your copy today.