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Tennessee Corporate Law Blog

Make sure your buying group doesn't restrict competition

This country's entrepreneurial spirit was born out of the concept that competition offers consumers options, makes products and services better and generally keeps things interesting. There is enough profit to go around and the country thrives when more people are making money. When a buying group restricts these concepts, it could find itself in trouble with both Tennessee and federal authorities.

Antitrust laws help ensure that no one buying group has enough power to force consumers to purchase goods or services at certain prices. They also help make sure that small companies retain the opportunity to enter or remain viable in the market. It can be easy for a buying group to choke out smaller businesses if it fails to keep these laws in mind.

Business litigation can be reduced by good contract drafting

When a business is starting out in Tennessee or in another state the time will come when one must enter into business contracts with vendors, customers, clients or others. Some new business owners try to stay away from anything as formal as a written agreement because they think that this will plant the seeds for future trouble and conflict. Just the opposite is true, and in fact, the incidence of business litigation is reduced by implementing contracts for clarity and mutuality of intention.

Contracts are an established tool in the business world because they can remove doubt and uncertainty. With the complex data that may be the subject of today's agreements, it would be nearly impossible to even remember one's obligations without a written memorial of the promises and undertakings that were agreed upon. It would be difficult to plan one's budget ahead if the business did not have written agreements to rely on for certainty in financial relations with others.

Successful franchising also carries business litigation pitfalls

Entrepreneurs in Tennessee and elsewhere may have the good fortune to enter an industry that is popular with the public and growing rapidly. Their company, however, may be unable to keep up with the pace of growth in the industry. It may, for example, fail to meet the fast demand for products by the consuming public. One popular and sometimes wildly successful remedy is to franchise the business model on a regional or national level.  This is a popular way for some entrepreneurs to rise to the top quickly, but the risks of business litigation along the way must be guarded against.

For those who want to achieve a far-reaching presence in an industry, franchising may be the likely answer. It boils down to a process of finding qualified partners throughout the intended geographical area to share the cost of such dynamic growth and to add the necessary labor demands that will be needed. To construct a successful franchise framework will take some very detailed work and the exercise of intensive due diligence. 

Employee handbooks outline business and corporate law

Building a Tennessee business means having goals for expanding and growing. This may include adding more locations and increasing products and services to offer. It also means training and establishing a staff that can sustain that forward momentum and participate in the company's growth. However, with employees comes many new aspects of business and corporate law.

One way to address many of those elements of law and to ensure employees are aware of a business owner's expectations is to create a comprehensive employee handbook. The policies within the handbook should be reviewed with a new hire as early as possible in the hiring and training process so there is no confusion about the code of conduct the owner expects as the standard among employees. This includes matters ranging from dress codes, discrimination and harassment policies, and termination procedures.

Mergers and acquisitions can involve small, growing companies

Relatively small companies based in Tennessee or elsewhere may acquire, or merge with, even smaller companies for a variety of purposes. Mergers and acquisitions is that area of the law dealing with such transactions. A company that is growing often turns to acquiring additional units that will complement the existing business.

This can be done to enhance the company's geographical reach or to expand its technological services, or for a myriad of other reasons. The purchasing company is usually the company that will technically survive the merger or acquisition in a legal sense, but it is common for the owners of the acquired company to remain with the newly constituted enterprise. For example, Dean Dorton, a company specializing in business management, consulting and technological services, recently purchased Massey Consulting, a full-service consulting company that is expected to increase Dean Dorton's offerings in the area of software solutions.

Buying groups continue to add value

Pooling buying power can generate tremendous savings by negotiating better prices for services or materials.

The Delmarva Poultry Industry Inc., recently renegotiated an electricity contract for its 200-member buying group that realized an 11 percent lower rate. The new three-year contract is one of the lowest negotiated by the buying group since its founding in 2006 and will save members more than $600,000 over the life of the contract, or about $1,000 per member per year.

Business litigation between beer giants is settled amicably

Litigation between business entities in Tennessee and elsewhere involves many different kinds of business law disputes. Often at the heart of a business litigation conflict, however, is the plaintiff's claim that the defendant business has breached its duties under a contract between them. Sometimes, the claim can be filed on the anticipation that a breach is being planned by the other side, which may be characterized as a claim of anticipatory breach of contract.

That appears to be the basis for a lawsuit filed in 2016 by Pabst Brewing Co. against MillerCoors LLC. In the suit, Pabst claimed that MillerCoors intended to breach a contract between them to continue manufacturing and shipping Pabst products. Since 1999, the larger MillerCoors has manufactured and shipped nearly all of the Pabst brand products as per the terms of their agreement. Pabst sued when it allegedly learned that Miller intended to cease continued production of Pabst products under the agreement.

Business litigation over franchise marketing favors franchisor

The courts in Tennessee and other states are familiar with the area of business litigation that deals with franchise law.  A variety of conflicts arise in the context of retail franchise establishments, usually dealing with disputes between the franchisor and the franchisee. A recent court decision demonstrates how varied the conflicts can become in this busy area of business litigation.

A federal district court judge has ruled that a Muslim fried chicken franchise cannot advertise its fried chicken as being "halal" certified, which connotes a religious connotation to the food that is prohibited by the company that issued the franchise. The court ruled that the franchisor had every right to bar its franchisee from advertising its products with religious terminology attached. The decision held that it was not relevant that the company had allowed the franchise to use the advertising in prior years.

Superstar looks to settle trademarks and copyrights dispute

Tennessee gets its share of trademark disputes involving entertainers who believe that their name or protected business marks are being infringed upon by outside parties. Disputes over trademarks and copyrights that cannot be resolved in private negotiations will likely be filed as litigation, asserting trademark infringement in a federal district court. One entertainer who has attempted to go that route to protect her namesake and its business integrity is Beyoncé.

She sued the individuals who have been marketing merchandise under the name "Feyoncé." To add to the fire, the defendants have allegedly also added the phrase "put a ring on it" which is the equivalent of a play on the lyrics from the superstar's hit, "Single Ladies." The lawsuit, however, was met with less than full homage by the presiding federal district court judge.

Business and corporate law issues arise in the startup phase

When starting a business in Tennessee the entrepreneur may find that it is necessary to conduct a risk assessment evaluation of the applicable pros and cons of the project. How much risk will the investor take on to achieve a certain level of rewards? Where the precise business has not yet been selected, one may also have to evaluate whether to purchase a franchise or set in action a new startup. These are all business and corporate law issues that arise in the early phases of planning.

The personality of the entrepreneur may play a part in such decisions. For independent thinkers who want to create a new business like a painter maneuvers through a canvass the choice will tend toward a new startup. The person who wants to avoid making out-of-the box mistakes and who is more cautious may prefer an established franchise. However, if one needs a broad scope of freedom in the creation and management of the business, the franchise is not likely the ticket.

  • Rated Super Lawyers | Harry B. Ray | SuperLawyers.com
  • AV | Peer Review Rated
  • ABA | Defending Liberty Pursuing Justice
  • TBA | Tennessee Bar Association
  • State Bar Of Georgia | Lawyers Serving the Public and the Justice System
  • CBA | Chattanooga Bar Association
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