Blog

2021 Midwest Road, Suite 200, Oak Brook, IL 60523

Blog

contract red flagsNo one likes to feel like they've been taken for a ride - especially in business and when your valuable time and money are at stake. So what are some common "red flags" in a business transaction or contract? Here are the most common contract red flags:

  1. Poor formatting and bad writing. You don't need even need to read a contract sometimes to know it's something you should run away from. Unfortunately, we've even seen some bad contracts come from other attorneys. The spacing is off, you can barely read the contract, and there is a lack of standard formatting. This indicates that a person who has no contract experience wrote the contract, or an attorney who is not well versed in contracts wrote it. This also raises the question of "if these people can't get a contract done right, what else is wrong, and do I want to do business with them?"
  2. Length of the Contract. The length of the contract will, of course, be different for different types of transactions, but when the length is totally off, it's a red flag. Are you entering into a 6-figure deal with a 3-page contract? Red flag. A
...

How to Buy a Business

buying a businessWhat are the steps of buying a business? Do you just exchange money and sign a few documents? How do you know if you should buy a particular business? How many questions do you get to ask about a business for buying as a buyer? If you are asking these questions, this article is for you.

First Things, First: Initial Discussions

The initial stage of buying a business is pretty informal. The buyer and seller will talk about the viability of the deal, gauge the interest of the other parties, and the seller may even provide financial information. During this phase, the seller may ask the buyer to sign a non-disclosure agreement (NDA) if the seller is sharing sensitive information with the buyer, especially if that information is related to finances. If the seller is represented by a business broker, then the broker may help the discussions and act as an intermediary between the buyer and seller. Valuation of the business also often happens during this stage. The seller will provide its EBIDTA and the buyer will take this information to her accountant to see if the financial calculation adds up. Based on the numbers, the buyer and seller will agree on a tentative purchase price.

Next: The Letter of Intent (LOI)

Once the buyer and seller both see that the transaction is beneficial for both of them and they are serious, the buyer will present a ...
franchise People who buy into franchises often buy more than one so they can have more businesses and make more money. Franchise buyers are often entrepreneurially-minded and want to grow their book of business (meaning their book of franchises). The nice thing about franchising is that all the rules, systems, and recipes (if food related) are handed down to the franchisee. All the franchisee has to do is follow those. Once the franchisee has one in place and that franchise is successful, it's relatively easy to replicate this once the franchisee has the hang of running the business.

So this raises the question - can you own more than one franchise?

Like all good legal answers, the answer is "it depends." Generally, there are no laws that prohibit owning more than one franchise, so the answer is in the franchise agreement. Franchise agreements often have restrictions on what other type of business a franchisee can own. Sometimes those restrictions are way too broad or overly restrictive which could mean that you would be violating the franchise agreement. You would want to negotiate those terms to be in line with your future goals. Other possible terms in the franchise agreement that could affect your ability to open more than one franchise are geographic restrictions. Sometimes franchisors prohibit the franchisee from doing business in certain territories so you want to make sure those terms are in line with your future goals. Need ...

letter of intentWhat is an LOI?

We get a lot of people and business owners coming to our office asking if they should sign a "letter of intent". Many people and business owners mistakenly think they can sign the letter of intent (LOI) without any risk. Because LOIs are meant to be not binding, it is easy to mistakenly believe that they can just sign it and all is well. This is not true. First, what exactly is a letter of intent (LOI)?? LOIs are used in different situations such as when someone wants to buy a business, give a job offer, or sign a lease agreement. LOIs are meant to contain the basic agreed-upon terms that eventually make their way into the contract. People and businesses sign LOIs typically when they are negotiating terms of a transaction but may need to do more research, such as going through due diligence when buying a business. But signing the LOI indicates to both sides that they are serious and not wasting each other's time. They may also contain confidentiality clauses or a "no-shop" clause in the case of when a seller is trying to sell the business. A "no-shop" clause is when a seller of a business promises not to accept any other offers from buyers while the buyer is doing its due diligence as to the seller's business.

So what's the problem with just signing an LOI "because

...