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Buy-Sell Agreements for Medical Practices

We Help Medical Practices with Buy-Sell Agreements in the Bay Area

Do you own and operate a medical practice in California? If you share ownership rights with any other party, it is imperative that you have a well-drafted buy-sell agreement in place. It is important to hire a solutions-driven business lawyer with extensive experience advising medical practices. If you have any questions about buy-sell agreements, we can help. Contact us at our Fremont law office today to set up your confidential, no obligation initial consultation.

What is a Buy-Sell Agreement?

A buy-sell agreement (buyout agreement) can be a contract between co-owners of a business. Most often, the agreement lays out the procedure under which the shares of a departing owner will be distributed or sold if they decide to exit the business due to various reasons—such as death, disability, or retirement.

Why Buy-Sell Agreements Are So Important for Medical Practices in California

While many business owners can benefit from a buy-sell agreement, these types of contracts are especially vital for medical practices. California law mandates that a medical practice must be owned and operated by a licensed medical professional (Moscone-Knox Professional Corporation Act). If a physician partner suddenly departs, another licensed professional must own the business. The practice cannot be directly transferred to most other parties—such as a non-physician spouse. A well-drafted buy-sell agreement helps to ensure a proper transition plan is in place.

A Buy-Sell Agreement Should be Customized to Meet the Needs of a Medical Practice

Every medical practice has its unique dynamics, professional relationships, and future aspirations. As such, a generic, one-size-fits-all buy-sell agreement can lead to complications down the road. It is crucial that the agreement reflects the individual needs and circumstances of the medical practice. Especially taking into consideration the assets and liabilities of the practice. You will want to make sure that you address any unique issues related to your practice.

Key Elements of a Well Drafted Buy-Sell Agreement

Although every buy-sell agreement should be customized to meet the needs of the medical practice, there are some key issues that should always be considered and addressed. Here are some of the most important elements that you will find in a typical buy-sell agreement:

Valuation: Parties should define how the practice will be valued—whether through a predetermined formula or by a specified third-party professional.
Trigger: The contract should clearly state the situations (death, disability, retirement, etc.) that will activate the buy-sell provisions.
Funding: A properly drafted agreement will explain how the buyout will be funded—whether through insurance, personal funds, or outside financing.

We Help Medical Practices Negotiate and Draft Buy-Sell Agreements

Buy-sell agreements for medical practices are complex contracts. It is imperative that you have the right agreement in place for your business. Our law firm negotiates, drafts, and reviews buy-sell contracts for medical practices in California. We will ensure that any contract that you sign properly protects your legal rights and financial interests.

Contact Our California Business Lawyer for Medical Practices

Lynnette Ariathurai is a business law attorney for medical practices who has extensive experience with buy-sell agreements. Contact us today for your confidential consultation. We help medical practices with the negotiation, drafting, and review of buy-sell agreements throughout the Bay Area.

buy-sell agreements, medical practice ownership, sell medical practice

Legal Language to Include in Contractor Contracts and Estimates to Reduce Liability to the Licensed Contractor

Contracts are at the foundation of most modern commercial relationships—especially in construction and other trades. It is imperative that contractors have properly drafted agreements—including their pre-agreement estimates. Language matters. Here, our Fremont business contracts lawyer provides an overview of some of the most important legal language to include in contracts and estimates to reduce the risk of liability.

Indemnification Provisions

Legal protection for contractors often starts with a well-drafted indemnification clause. Broadly defined, an indemnification provision is a contract term that holds that one party is responsible for compensating the other party for any harm, loss, or liability. Any contract or estimate presented by a contractor should clarify indemnification. It is a big issue for contractors working with subcontractors or other parties on a project. For contractors, a well-drafted indemnification provision can help to shield you from third-party claims.

Limitation of Liability Clauses

Limitation of liability is another essential piece of legal language for contractors. In effect, this type of contract provision limits the total amount of liability of a contractor. These clauses can be enforceable in California. However, they must be properly drafted. Under California law (Cal. Civ. Code § 1668), contractors cannot limit their liability with regard to certain acts or omissions—such as gross negligence, willful misconduct, or certain statutory violations.

For example, imagine that a contractor violated certain health and safety laws during a project. As a direct result, their customer sustains significant damages. Not only does a new California law (AB 1747) raise the potential statutory penalties that a company could face to up to $30,000, but such a violation could also render a limitation of liability clause unenforceable.

Limitation of Damages Clauses

Similar in intent to the limitation of liability clauses, limitation of damages clauses explicitly define and often cap the damages recoverable by the other party. For instance, this type of contract term may stipulate that consequential damages cannot be sought. Under California law (Cal. Com. Code §2719(3)), a limitation of damages clause cannot be deemed unconscionable. If a limitation of damages is ruled unconscionable by a California court, it could be set aside.

Dispute Resolution Provisions

Dispute resolution provisions can also affect contract terms for companies to limit their liability risks. A key advantage of a well-drafted dispute resolution clause is that it can help a contractor

avoid the costs and unpredictability of litigation. These contract terms stipulate that parties agree to resolve disputes through methods like mediation or arbitration rather than going to court. For example, many contractors opt to include an arbitration provision in a contract. To be enforceable in California, this clause must be properly drafted.

Get Help from Our California Business Law Attorney for Contractors

Lynnette Ariathurai is a business lawyer with extensive experience drafting, reviewing, and negotiating contracts for contractors and construction companies. If you have any questions about reducing your liability risk, please contact us for a confidential initial consultation.

construction business legal advice, construction business legal language, construction business regulations, contract drafting, contractor estimates, contractor liability

Legal Needs in Setting Up a Successful Construction Company in California

Are you preparing to set up your own construction company? It is imperative that you have the right structure in place. Here, our Fremont lawyer for starting a business highlights the key things to know about setting up a successful construction company in California.

Know the Licensing Requirement: CSLB Contractor’s License

To start a construction company in California, you must have the proper license. If you already have a California State License Board contractor’s license, you can start a construction company right away, regardless of whether you have any prior history owning your own business. In other words, you can start your own construction company today if you have a CSLB contractor’s license, but you have only ever worked for other employers.

We Help CSLB Contractors With their Application for an Entity License

Companies providing contractor services will need a CSLB license. Navigating the complexities of obtaining an entity license can be daunting for CSLB contractors who are preparing to start their own company. Our team can help. We are committed to simplifying the process and providing comprehensive assistance tailored to the unique needs of each contractor. With in-depth knowledge of the requirements, we ensure your application is complete and accurate. For construction companies in California, bonds are generally required. Of course, obtaining the proper insurance coverage is also incredibly important. For some types of entity licenses, workers’ compensation coverage is required even if the company has no employees.

Other Important Legal Needs for Starting a Construction Company in California

Beyond obtaining the CSLB contractor’s license and the business entity license, there are several other key considerations that you need to address when starting a construction company. Some other notable legal needs for setting up a construction business in California include:

City business license (business permit): Most cities in California have their own regulations regarding business operations. Before you can legally run a construction company in a local area, it is essential you secured any required business license/business permit. The permit legitimizes your operations within the city.
Legal structure for business (sole proprietorship, LLC or corporation): A construction company needs the proper legal foundation. While some construction companies are established as sole proprietorships or corporations, some entrepreneurs in the construction industry opt for a limited liability company (LLC) structure. Notably, a properly formed and operated corporation or LLC can provide owners with personal liability protection.
Compliance with California employment laws: California has stringent employment laws designed to protect workers. As a construction company, it is crucial to understand and adhere to these laws. Notably, construction businesses should pay close attention to the regulations regarding employees and independent contractors.
Properly drafted contracts: Contracts form the backbone of most construction projects in California. These contracts define the scope, payment terms, responsibilities, and potential liabilities among other things. CSLB also requires certain language to be included in contracts for construction services. To protect your company from future disputes and comply with CSLB, a construction company’s contracts should be drafted and/or reviewed by an attorney.

Contact Our Bay Area Business Lawyer for Construction Companies Today

Lynnette Ariathurai is an experienced, solutions-driven business lawyer. We help clients set up successful construction companies. Contact us right away for a fully confidential appointment. We provide business law services to construction companies throughout the Bay Area.

construction business insurance, construction business legal advice, construction business legal entity, construction business regulations, new construction business

How the New California Privacy Rights Act (CPRA) Compliance Law Impacts Businesses

The California Privacy Rights Act (CPRA) is a state statute that went into effect on January 1st, 2023 and is now officially being enforced. It is imperative that all companies in California understand their responsibilities under the CPRA and its parent law, the California Consumer Privacy Act (CCPA). In this article, our Fremont business attorney provides an overview of the key things that companies should know about compliance with the CPRA.

Background: The CPRA Clarifies a 2018 California Privacy Law

The California Consumer Privacy Act (CCPA) is a state law that was passed to provide consumers with control of the personal information that businesses collect. The California Privacy Rights Act (CPRA) is a law that significantly amends the CCPA. Notably, the CPRA was passed through a ballot initiative in 2020. At that time, it was known as Proposition 24. As noted above, enforcement of the CCPA/CPRA officially started on July 1st, 2023.

Which Businesses are Required to Comply With the CPRA?

It is important to emphasize that not every business is required to comply with the CPRA. It applies to all companies that are either based in California or sell products/services in California and meet one of the following three criteria:

The business has gross annual revenue of $25 million or more
The business generates at least 50 percent of its annual revenue from selling or sharing the personal information of consumers
The business buys, sells, or shares the personal information of residents of at least 100,000 households in California during the year

While the first criterion is relatively straightforward—larger businesses ($25 million in annual revenue) must comply—it is the third that could affect many smaller or mid-sized businesses under the scope of the CPRA.

Note: The CPRA does not apply to non-profit organizations or government agencies.

How to Comply with the New California Privacy Rights Act

Is your company covered by the scope of California’s revised consumer privacy law? It is crucial that you are in full compliance with the regulations. Here is the key thing to know about compliance: California businesses that are covered by the new CPRA need to have a comprehensive written privacy policy in place. That policy must meet all the requirements of the law. Among other things, a written privacy compliance policy should address:

The process for disclosing that your business collects personal information about a consumer at or before the point of data collection.
A clear statement that consumers have the right to request that information that you collected about them as well as your CPRA privacy policy.
An acknowledgment of and process for addressing the fact that consumers have the “right to be forgotten” under California’s privacy law—meaning they can request that you delete personal data.
A process for allowing consumers to “opt-out” of having their personal information sold to or shared with third parties.
A statement affirming compliance with the “right to fair treatment”—as California law holds that consumers cannot face unfair treatment for restricting access to their personal data.

Schedule a Confidential Consultation with Our California Business Lawyer Today

Lynnette Ariathurai provides solutions-focused guidance and support to business owners and entrepreneurs. If you have any questions about the new California Privacy Rights Act or CPRA compliance, we are here to help. Contact us today for a confidential consultation. We serve businesses throughout the Bay Area, including in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, San Jose, and Santa Clara.

business attorney, california privacy rights, compliance law, consumer privacy law, privacy policy

Minimizing Debt Transfer When You Purchase a Business

Are you considering buying a business in California’s Bay Area? If so, it is imperative that you ensure the transaction is properly structured. A well-structured purchase agreement is especially important if the target company has a considerable amount of debt. With the right approach, you may be able to minimize the debt that you take on as part of the transfer. Here, our California attorney for buying a business highlights some of the key things that you should know about minimizing the debt transfer when you purchase a company.

Why It Matters: Buying a Business Could Mean Taking on Its Outstanding Debt

Buying a business in California is about more than just about acquiring its assets. You also inherit outstanding liabilities, including unpaid debts. The amount of debt held by the business that you are looking to acquire can significantly impact the investment value. There are strategies that entrepreneurs can use to help minimize debt transfer.

Four Key Strategic Considerations to Minimize Debt Transfer When You Buy a Business

When buying a business, a proactive approach can make all the difference. It is crucial to protect your rights and interests. Here are four key strategic points to keep in mind when working to minimize the amount of debt that you take on when you acquire another business:

Do your due diligence (know what is owed): Before finalizing a business purchase, be sure to conduct a thorough review of its financial records. It is vital to understand the full extent of its assets and liabilities. You need to accurately evaluate the business’ true value and potential risks.
Negotiate with the seller to focus on reducing debts: Once you fully inform yourself about the actual assets and the outstanding debts, use this knowledge as a bargaining tool. It may be possible to negotiate the price downwards or require the seller to clear the liabilities before you close.
Consider an asset purchase: Instead of buying the business entity itself, contemplate purchasing its individual assets. An asset purchase approach is one that allows you to handpick the assets you want and avoid taking on a majority of unwanted liabilities.
Beware of successor liability risks: Even with an asset purchase, the purchaser of a business may still be held responsible for the previous owner’s liabilities under California’s ‘successor liability’ laws (Cal. Code Regs. Tit. 18, § 1334). Always consult with experienced legal counsel.

An Attorney Can Help You Structure a Business Purchase to Best Minimize Debt

The purchase of a business is an incredibly complex transaction—particularly so when that company still has outstanding liabilities. You do not have to figure out everything on your own. Engaging an experienced Bay Area business acquisition attorney is vital. Not only can your lawyer bring legal expertise to the table, but they are also able to review the proposed deal, negotiate on your behalf, help you evaluate all your financial risks, and take action to protect your rights and interests.

Contact Our California Business Acquisition Attorney Today

Lynnette Ariathurai has deep experience handling complex business transactions. If you have any questions about minimizing debt transfer when buying a business, we can help. Contact us now for a confidential, no obligation initial appointment. With an office in Fremont, our firm serves clients across the area, including in Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Santa Clara, and San Jose.

acquisitions attorney, business attorney, buy business, reduce debt transfer

Legal Structures for Veterinarians in California

For so many people, their pets are cherished family members. Their local veterinary practice helps to keep dogs, cats, and other animals safe and healthy. It is a competitive and highly regulated industry. Every veterinary practice in the Bay Area needs the right legal structure to thrive. Here, our veterinary business lawyer provides an overview of the key things to know about legal structures for veterinary practices in California.

California Veterinary Practices: You Should Form a Professional Veterinary Corporation

In California, a veterinary practice cannot operate as a limited liability company (LLC), partnership, or general stock corporation. Under the California Veterinary Medicine Practice Act, a veterinary practice should be formed as a professional veterinary corporation. It is a unique type of legal entity that offers several advantages, including compliance with state regulations, limited liability, and tax advantages. A business formation attorney can help you set up your practice. Notably, a professional veterinary corporation may qualify to be taxed as S-corporations (S-corps) in California.

Key Steps to Form a Professional Veterinary Corporation in the Bay Area

Forming a professional veterinary corporation in California requires several key steps to ensure compliance with both state law and the regulations of the veterinary profession. Here are five key things that you should do when forming a veterinary practice in the Bay Area:

File the articles of incorporation: The first step to establish your professional veterinary corporation is to file the articles of incorporation with the California Secretary of State.
Appoint directors and draft bylaws: After filing the articles, you must then appoint your corporation’s board of directors and draft bylaws. The bylaws lay the groundwork for how your corporation will operate, including details of meetings, roles, and responsibilities of directors and officers.
Notify the California Veterinary Medical Board (VMB): The next step involves notifying the California Veterinary Medical Board about your new corporation. The board requires a Notice of Veterinary Corporation and a fee to register your practice.
File form 2553 for S-corporation taxation: As part of managing your corporation’s financials, you should consider filing IRS form 2553 for S-corporation status. It is a type of business taxation that allows income, losses, deductions, and credits to pass through to U.S. resident shareholders for federal tax purposes, thereby avoiding double taxation.
Pay the California Franchise Tax Board: Finally, the professional veterinary corporation must register with the California Franchise Tax Board and pay the required minimum franchise tax annually.

Veterinarians do not have to navigate the business formation process alone. An experienced attorney can help you ensure that your professional practice has the right legal structure in place.

Contact Our Bay Area Business Lawyer for Veterinarians in California

Attorney Lynnette Ariathurai has the professional skills and legal expertise to help veterinarians and their partners set up successful professional practices. If you have any specific questions about the legal structure for a California veterinary practice, please do not hesitate to contact The Law Office of Lynnette Ariathurai today. With a legal office in Fremont, we serve veterinary businesses throughout the Bay Area.

California veterinarian practice regulations, professional veterinary corporation, veterinary practice legal advice, veterinary S-corporation

Apply for your Home Health Care License before Purchasing a Home Health Care Company

Home health care is a rapidly expanding industry in California. The Employment Development Department (EDD) notes that the home health care industry already generates more than $10 billion in annual revenue in our state. You may be thinking about purchasing a home health care company—either to add to your existing business or to get into the industry.

When buying or acquiring a home health care agency in California, it is imperative you understand the licensing requirements. You should apply for your license before you purchase the company. Our Bay Area home health care agency attorney explains what you need to know about home health organization licenses and purchasing these businesses in California.

Understanding the Licensing Requirement: Home Health Care Agencies in California

As of January of 2016, all home health care agencies that operate in California must comply with the Home Care Services Consumer Protection Act. Among other things, the law requires that all home health care organizations in the state must be properly licensed. If you do not have the appropriate home health care license, it is unlawful for you to operate the business. Licensing is a major consideration when you buy/acquire a home health care business.

You Cannot “Buy” a Home Health Care License in California

In California, obtaining a license to operate a home health care service is not as simple as purchasing an existing business. Buying a home health care business in California does not mean that you automatically get access to its license to operate.

All individuals interested in entering this industry must be prepared to apply for their own license or be prepared to complete a required waiting period. Licensing is an issue that you should address before you finalize the purchase of a home health care business.

You do not want to end up in a situation whereby you effectively buy the debt of a home health care business and a few relatively low value assets, without getting access to the license that you need to operate the company.

Protect Yourself: Consult with a Business Lawyer who has Home Health Care Experience

Buying a business is complicated—especially so in California’s highly regulated home health care industry. It is imperative that any deal that you enter is structured properly—with licensing sorted out before the transaction is finalized. Do not go it alone. When venturing into the home health care industry in California, it is crucial to engage a knowledgeable business lawyer with industry-specific experience. Your attorney will understand the complexities of licensure, issues of regulatory compliance, and the ins and outs of the business transfer processes.

Contact Our Bay Area Home Health Care Business Law Attorney Today

Lynnette Ariathurai is a commercial lawyer with the unique skills and experience to handle the issues facing home health care agencies. If you have any questions about health care licenses and the purchase of a home health care company, please contact us today for a fully private consultation. From our Fremont office, our firm serves home health care agencies across the Bay Area.

California home health care licensing, home health care agency, home health care licensing

Securing your Medi-Cal License before you Purchase a Medical Practice

Are you preparing to purchase or acquire a medical practice in California? It can be a fruitful business decision—but it is crucial that all aspects of the transaction are handled properly. Health care is a highly regulated industry. You need to obtain a Medi-Cal license—and there are certain steps that you should take to help ensure your application is approved in a timely manner. Our Bay Area business law attorney explains why it is so important to secure your Medi-Cal license before you purchase a medical practice in California.

Background: The Importance of a Medi-Cal License

Medi-Cal is California’s Medicaid program. The public health insurance program provides coverage for health care services for low-income individuals and other qualifying people with significant financial or medical needs. As explained by the California Department of Health Care Services (DHCS), a medical practice must apply to enroll in the Medi-Cal program to be an eligible provider. It is a big market and medical providers that are not enrolled cannot be reimbursed by Medi-Cal.

A Premature Medi-Cal Application Will Result in Denial

The Medi-Cal application enrollment process you must undertake when buying a medical practice in California is complicated. Timing is a key issue. Submitting your application too early—prior to fully establishing the business—can result in denial. Medi-Cal stipulates that before applying, practices must meet several requirements, including securing a lease and fulfilling other preconditions, defined as “establishing the business” under CCR Title 22, Section 51000.60. The proper sequence of steps is crucial when applying for a Medi-Cal license. An experienced attorney can help you navigate this procedure and with other matters related to the purchase or acquisition of a medical practice.

You May Qualify as a Transferee Applicant if You Buy a Medi-Cal Enrolled Medical Practice

If you are planning to purchase or acquire Medi-Cal enrolled medical practice, you could potentially qualify as a “transferee applicant”. It is a classification that is applicable to individuals or entities acquiring a business already enrolled with Medi-Cal. Notably, the transferee application is a distinct process that can help streamline the transition and speed up Medi-Cal enrollment. However, not all purchasers will qualify. It depends on your specific situation. There are several different requirements that must be met. Among other things, you will need a valid Successor Liability with Joint and Several Liability Agreement. A Bay Area business lawyer with experience handling medical practice transitions in California can help you understand all your options and ensure that your purchase is structured in the manner designed to best protect your interests.

Contact Our California Business Lawyer for a Confidential Consultation

Lynnette Ariathurai is a business lawyer with experience helping clients purchase medical practices. If you have any questions about Medi-Cal licenses and the purchase or acquisition of a medical practice, we can help. Call us now or contact us online to set up a confidential consultation. With an office in Fremont, our firm serves communities throughout the San Francisco Bay Area.

California Medicaid, Medi-Cal licensing

Building a Group Practice Veterinarian Business

According to the most recent information published by the Bureau of Labor Statistics (BLS), California had 7,770 actively licensed veterinarians as of 2022. For veterinarians, there can be significant commercial advantages to operating as part of a group practice. At the same time, building a successful group veterinary practice is complicated. It is imperative that you have the right structure in place. In this article, our Fremont attorney for starting a business highlights the key things to know about building a group practice for a veterinarian business in California.

Develop a Shared Vision to form a Group Veterinary Practice (Business Plan)

Building a successful group veterinary practice starts with getting all major players on the same page. It is generally a best practice to develop a comprehensive business plan. Among other things, your business plan should outline the goals, operational strategies, and financial projections of your practice. It should also include things like a market analysis—which can be used to identify potential clients, competitors, and commercial risks.

Form Your Veterinarian Business – You Need the Right Legal Structure

The right legal structure is essential for your group veterinary practice. In California, a professional veterinary corporation is generally the most sensible structure for group veterinary practices. It provides liability protection while being taxed as an S-corporation. Notably, there are strict ownership requirements for professional veterinary corporations in our state. It should be owned by a licensed veterinarian. To form a professional veterinary corporation, you will need to file articles of incorporation with the California Secretary of State and draft bylaws.

Ensure Your Business is Properly Registered and in Compliance with Tax Regulations

Once your professional veterinary corporation is formed, it is crucial to register your business and ensure compliance with all business regulations and tax laws. Apply for an employer identification number (EIN) from the IRS, which is necessary for tax purposes. California has an annual franchise tax of $800 for all professional corporations. Beyond tax laws, it is also crucial that you ensure that all veterinarians who are part of the group practice are properly licensed.

Find and Lease the Right Commercial Space to Operate Your Veterinary Business

A group veterinary practice in California needs the right commercial space to operate effectively. Finding the right location is a key component to the success of your group practice. Consider factors such as accessibility, parking availability, proximity to a demographic that aligns with your target market, and the potential for growth. As commercial lease negotiations can be complex, you should be ready to consult with a top business start-up attorney.

Contact Our Fremont, CA Business Law Attorney for Veterinarians Today

Lynnette Ariathurai is a top business law attorney with the skills and experience to represent veterinarian businesses. If you have any specific questions or concerns about building a group practice veterinarian business, please contact us today for a fully confidential consultation. With an office in Fremont, we serve veterinary practices throughout the Bay Area.

group vet practice, group veterinary business, veterinary group practice, veterinary practice legal advice

5 Critical Aspects of a Franchise Agreement—What to Know Before You Sign

Franchises are one of the most popular business models in California. According to data from the International Franchise Association (IFA), there are approximately 76,000 franchise businesses operating in the state. The franchise agreement is the foundation of the relationship between the franchisor and the franchisee. As a prospective franchisee, you need to carefully review the terms of the contract. Here, our Fremont business law attorney highlights five critical aspects of a franchise agreement and explains the key things to know before you sign in California.

California Regulates Franchise Agreements—But Contract Language is Still Key

The California Franchise Relations Act (CFRA) is a state law that establishes a regulatory framework for franchise relationships. It was passed, in large part, to establish protections for franchisees. The CFRA aims to foster fair business practices and safeguard the interests of California franchisees. Along with other key issues, the law regulates:

Jurisdiction;
Termination;
Nonrenewal;
Transfer of rights;
Inventory repurchases;
Arbitration clauses; and
Venue selection.

While California law provides some important legal protections to franchisees, it is imperative to emphasize that the relationship between the franchisor and the franchisee is still primarily governed by the franchise agreement. You should ensure that your franchise agreement is reviewed by a California business lawyer who has experience representing franchisees.

Note: The California legislature recently passed Assembly Bill 676 (AB 676) into law. It updates both the CFRA and the California Franchise Investment Law (CFIL). The state statute imposes some additional obligations/restrictions on franchisors.

Five Key Things to Look for in a Franchise Agreement in California

The Total Cost (Start-up Investment, Ongoing Costs, etc)

Cost matters. Franchisees in California should consider both the initial investment and ongoing costs. The initial cost—often referred to as the franchise fee,—is the amount payable upfront to gain the right to operate the business. It can vary widely based on the franchise, the industry, and the specific market conditions. Of course, this is just the beginning: A franchisee in California is often also responsible for ongoing costs, such as royalty fees, marketing fees, and other expenses.

Grant of Rights (Territorial Protection, Intellectual Property Usage, etc)

The grant of rights outlines the specific rights and restrictions that the California franchisee has under the franchise agreement. Along with other things, this may include territorial rights. These rights dictate where the franchisee can operate and provide protection from encroachment by other franchisees. Beyond that, the franchisor may grant the franchisee the right to use their IP.

The Resources that Will Be Provided By the Franchisor

Franchisors often provide a variety of resources to franchisees to aid in their success. These resources may include comprehensive training programs, ongoing support, marketing materials, and access to proprietary systems and technology. The specifics of these resources should be clearly outlined in the California franchise agreement to ensure both parties understand their obligations.

Duration—including Renewal Rights and Early Termination Rights

The duration of the franchise agreement defines how long the franchisee has the right to operate the business. This is usually a fixed term, often between 5 and 20 years, but it varies depending on the franchisor. Additionally, the agreement will detail the terms for renewing the contract at the end of the initial term and conditions under which the agreement can be terminated early.

Dispute Resolution Provisions

Dispute resolution provisions are integral to any franchise agreement signed in California. They lay out the process for resolving disagreements between the franchisor and franchisee, whether they relate to contract interpretation, operational issues, or financial disputes. These provisions usually stipulate whether disputes will be handled through negotiation, mediation, arbitration, or litigation. Many franchise agreements include a mandatory arbitration provision.

Call Our Fremont, CA Franchise Law Attorney Today

Lynnette Ariathurai is a business law attorney with the skills, experience, and expertise to represent franchisees. If you have any questions about the terms or conditions of a franchise agreement, please do not hesitate to contact us today for a confidential, no obligation consultation. With an office in Fremont, we provide franchise law representation throughout the Bay Area.

Franchise agreements, franchise dispute resolution, franchise law, franchise regulations