Bennett Carroll Solicitors Blog

Making an offer on a property- Conveyancing Advice from a Lawyer

2012-02-28T19:45:00.000-08:00

Bennett Carroll Solicitors CEO, Guy Gibbons answers frequently asked questions when "Making an offer on a property".

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Surviving your divorce: Chapter 3: The Strategy And Initial Demands

2012-02-28T19:30:00.002-08:00

1. HARDBALL VERSUS SOFTBALL

Your Lawyers should talk with you about the overall strategy to be employed in this matter. Many factors influence this including your circumstances and personality, those of your opponent, what is at issue, and the approach most likely to allow you to reach your goal quickly and simply. The initial piece of contact (the first demand); will be tailored towards this end.

2. WHAT IF MY PARTNER WON’T NEGOTIATE?

Many times emotion gets in the way of resolving these issues and one party will respond irrationally or simply won’t respond at all. This can make matters difficult, costly and drawn out. This is the wrong way to navigate quickly and successfully through this process.

Remember, thinking clearly and logically and remaining focused on the goal will always beat a wild emotional response or a refusal to engage in the process.

If your partner will not negotiate, a more formal process forcing him or her to engage in a resolution, will need to be started.

The Court process should be the last resort, but you should not be frightened of taking that step if you are not getting anywhere.

A long-winded series of correspondence which is not resolving the issues, and serves no purpose, simply wastes time and money. You will reach a time where it is obvious that matters are not going to be resolved by negotiation.

Once you have stated your case and tried to get a resolution through exchange of views, there is no purpose in continuing.

Having said that, commencing the process of court action does not mean you are going to have to go all the way to a trial. This may be necessary to make you Ex realise this is serious and that you are prepared to take action if no agreement is forthcoming.

If that is the case, starting the Court process is a step forward.

3. TRICKS TO SECURE PROPERTY

One of the things that often makes decisions difficult and stressful when a relationship can no longer be maintained, is the thought of losing occupancy of the home.

You may have children to think about and cater for. You may have a concern that, if you leave the house, you will lose control of the major asset you own together.

The first thing to do is to check on who actually owns the house, so far as the Titles Office is concerned.

It is still quite common for the house to be in the name of only one party. If this is the case you may need some help to secure the property against it being sold without your knowledge. If the property is in your name, even partially, you do not need to worry about it being sold without your knowledge. So long as your name is on the Title somewhere, you will need to be consulted about a sale.

There are several other things that can be done to secure property which may assist:-

1. Caveat

This is a notice given to the Titles Office, which will then put a small notation on your Title Deed, which will prevent the property from being sold for a period of 3 months. This will allow you time to obtain either an undertaking about sale, or an order that the property not be sold without your knowledge.

2. Application for Sole Use

This is an application in Court for an order that your Ex vacate the property and leave it to your use. These orders will prevent your Ex from coming onto the property without your knowledge and consent. This is most often done when there are children involved, but there are other issues to be considered.

Control of Bank Accounts

It is essential that you seek advice early about the control of credit balances in bank accounts. In certain circumstances, it is perfectly in order for you to remove funds from an account to cover living and other expenses, to the detriment of your Ex. These monies will of course have to be accounted for and adjusted in final distribution, but can solve a lot of problems in early months of a separation.

When looking at adjusting a percentage split in favour of either party, Lawyers and the Courts will look at the following check lists:-

(i) The actual equity of the assets (the amount left over after all the debts are paid).

(ii) Financial and other contributions of both of the parties.

(iii) Future economic prospects of both the parties (can you stay in or return to the workforce and if so how soon and how successful will you be).

(iv) The health problems of either party.

(v) The needs of children and their effect on the parties’ ability to support themselves and those children.

(vi) Superannuation.

(vii) Age and other factors that might affect the future prospects of the parties;

more about this later.

Going to Auction- Conveyancing Advice from a Lawyer

2012-02-19T22:39:00.000-08:00

Bennett Carroll CEO, Guy Gibbons answers frequently asked questions about "Going to Auction".

Web: http://www.bcglaw.com/

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Blog: http://bennettcarroll.blogspot.com/

Testamentary Capacity

2012-02-19T15:38:00.000-08:00

Australians, in general, are growing older.

One of the side effects is that in the last five years, there has been a sharp rise in the incidence of attacks on Wills, based on the argument that the Testator (the person who signed the Will), did not have capacity to make a Will, at the time the document was signed.

There is hot debate even among the legal profession, as to how to deal with this issue.

Essentially, it is a medical issue.

The test for testamentary capacity (do you have enough marbles to make a Will), revolves around the question, “do you have sufficient capacity to understand the nature and effect of the document that you are about to sign?”

This might seem like and easy question to answer and medical assessments are commonly made in this situation.

Unfortunately, up until recently, Lawyers have attempted to make this assessment themselves.

Bennett Carroll was one of the first law firms to create a checklist and a regime to identify people at risk and then institute a medical assessment process to ensure that adequate expert evidence is available, rather than the vague observations and questions of a Lawyer who is not medically trained.

The Bennett Carroll system involves checking, in every case, for the presence of any risk factors that might identify a person whose capacity may be questioned in the future.

These triggers are:

1. Significant age, that is, 70 years or more;

2. Any prescription medication;

3. Any medical operation which has occurred in the last six (6) weeks;

4. Hospitalisation in the last six (6) weeks;

5. Any “significant illness”, that is an illness which would have any possibility of affecting someone’s ability to make a decision;

6. If the client is brought in by a relative in circumstances where there is some suggestion that the client’s capacity is impaired.

This is not about targeting people whose capacity is impaired. The sole purpose of this process is to obtain evidence to prevent a successful attack, often made many years later where records are lost or recollections have faded.

It is a protection measure, rather than some sort of slight on the testator.

If the evidence is obtained at the time of the signing of the Will, there can be no allegation against the Will on the basis of capacity, which has any prospect of succeeding.

A medical practitioner is asked to indicate in writing an opinion as to whether or not the testator has sufficient capacity to understand the nature and effect of a Will, if one were prepared for them.

This necessitates a test process undertaken by the practitioner, who will then produce a short written report. This should be all that is required to prevent a successful attack on the Will document. This simple precaution ensures that the time and for the money spent on an estate plan is not wasted.

Surviving your divorce: Chapter 2- Deciding if you want to proceed

2012-02-14T15:48:00.000-08:00

1. WHAT IF I DO NOTHING?

At the first interview or at some stage after it, you may decide you want to take the next step and proceed with resolving these issues.

One of the options almost always available to you is to do nothing.

Indeed, sometimes, doing nothing is the best option available either because you already hold the upper hand or because circumstances are improving all the time.

Most often however, any advantage is lost over time, and acting quickly will either gain or keep any advantage available.

As you can see, there is a balance here between acting quickly to keep or gain advantage, or to press for a change of attitude, and acting with haste and making a mistake.

The key to determining which of these you are undertaking is knowledge. You need to understand what is being risked or spent and what is likely to be gained from that risk or expense. It is the job of your adviser to get this across to you accurately, based on the law and the adviser’s experience, in a language you understand. If he/she cannot do this to your satisfaction, change advisers!

2. IF I LEAVE THE HOUSE DO I LOSE MY RIGHTS?

Some people fear that if they move out of the house they lose control or lose their rights to any share of the property, which is often the major asset in the relationship.

There are several components to this issue:-

(i) The right to enter;

(ii) Sale of the property;

(iii) Ownership of the net proceeds.

The Right to Enter

When a relationship ends, occupancy of the matrimonial home can often be an unnecessarily contentious issue. Your entitlement to a share in the net proceeds, or the equity of the property is determined by a whole range of issues.

Whether you live in the house is really irrelevant to that determination.

Except in very unusual circumstances, one or other of the parties will leave the home. In the majority of cases it will be the person who is not caring for children on a day to day basis.

It is possible to obtain an Order from the Court to get what is called “sole use and occupancy” of the home. At its simplest this involves kicking your Ex out to obtain exclusive control of the premises. This Order can be enforced to keep your Ex off the premises.

If you cannot agree on arrangements for the house and you are intending to stay, it is important that you take steps to secure it against uncontrolled entry. After taking legal advice it is likely going to be in order to change locks on the house. Ensure you seek advice before doing this as there are a couple of dynamics to consider here.

The registered owner will have the ability to sell that house as any registered owner does. You should know or at least check to see whether your name is on the Title. If your name is on the Title for the house, then the house cannot be sold without your consent and without you signing the Contract. In those circumstances, relax.

If your name is not on the Title Deed, then it is important that you make sure that you have some control over the process of selling the house, and therefore control over the proceeds of sale.

Your Lawyer can engineer a process whereby the property is not sold without your consent and if it is sold, the proceeds are quarantined so that your share is not lost. If you are not listed on the Title Deed, it is essential that you act quickly to secure this protection.

3. DOCUMENTS TO BE SIGNED

The Government requires any Lawyer to inform you in writing of how the arrangement will work. This means signing a Costs Agreement.

Lawyers are not supposed to act for you until that Agreement is signed and financial agreements have been settled and funding organised. Getting this out of the way quickly will keep your matter flowing. But you have the right to take the documents away and it is vital that you read and understand them. These documents govern your relationship with your adviser and his/her firm. They will be the primary rules for any query, misunderstanding or dispute between you. Read them, understand them, ask questions of your adviser if you are unsure (you do not have to pay for explanations about the costs agreement), and even take independent advice about them if you have to.

Particularly important to your understanding is a clear control of what you are going to be asked to pay and when.

Funding of family law matters if difficult and the methods available to law firms and clients vary greatly, as does the quality of care and speed with which matters are run, depending upon the firm and the credit arrangements made.

It is common for law firms to temporarily or permanently stop work on files when the client has not or cannot pay the cost of this work. The Courts and legal watch dog support this right, provided certain rules are followed.

It is important that the speed of your matter and any tactical advantages available are not compromised by having to stop work or chase you to meet your funding and credit obligations. It is in your interests to keep these arrangements up to date.

You need to have a clear plan and regular contact with your adviser or the person in the firm who deals with credit, so that you are not surprised or caught short, compromising your strategy in the matter.

Your adviser has an obligation by law to provide you with an estimate of the future cost of the matter and to keep this estimate current. These matters have common characteristics and an identifiable skeleton and milestones but, like estimating the size and weight of an adult by looking solely at the birth weight, the final size and shape can vary wildly.

Providing an accurate estimate is not easy.

There is a large range of matters that affect the cost of a family law matter, many out of the control of you and/or your adviser.

Some are:

1. needy client

2. obnoxious opponent/law firm

3. lazy opponent./law firm

4. uneducated opponent/law firm ie unaware how the law works client pays for us to educate them

5. opponent tactical use of delay to run up costs for our client

6. unexpected complexity

7. additional instructions (things you didn’t advise originally)

8. urgency

9. lack of funding

10. Client tardy in providing instructions at each step requiring constant chasing

11. chasing additional material from your accountants and others.

12. attending to basic matters on your behalf which you do not really need a lawyer for (eg redirection of mail)

13. government agencies and court registries changing procedure requiring additional material

14. you not following advices provided and getting yourself into deeper water requiring more steps to be taken to extract you

15. you providing instructions which are counter-productive to securing an outcome ie to “point score”

As you can see, all these things can increase complexity, delay and cost, and several of them you can control.

If you want a result at minimal cost and time, you need to understand your role in it and that of your adviser, and work together to reach that goal.

Open House- Conveyancing advice from a Lawyer

2012-02-05T19:04:00.000-08:00

Bennett Carroll CEO, Guy Gibbons answers frequently asked questions when attending an Open House.

Web: http://www.bcglaw.com/

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Transfer Documents

2012-01-22T22:24:00.000-08:00

There is a small suite of documents and a clutch of processes that go with them, designed to transfer to the buyer the tangible and registrable assets that make up the business. In most cases it is the buyer’s responsibility to create the documents that create these transfers, and you simply need to sign and return them.

You need to be aware however of the process.

Lease

In some jurisdictions the Lease Transfer is made of up of two documents; the Assignment of Lease itself, and a Deed of Covenant.

The Lease Assignment document (it may be called The Transfer or a Deed of Assignment depending upon the type of Lease you hold), will be prepared by the buyer and sent to you to sign and return. That document effectively transfers any rights that you have in the Lease. You should not return it unless you receive a written Undertaking from the solicitor to the buyer, that the document is not to be used pending settlement. If you do not receive this Undertaking do not return the document. Do not accept this Undertaking from the buyer itself. An Undertaking from the solicitor is an enforceable undertaking able to be pursued both through the Courts and through the solicitor’s disciplinary body. An Undertaking from the buyer itself is worthless.

The Deed of Covenant is a document designed to create a direct link between the buyer and your landlord. It enables the landlord to sue and creates what is called “Privily of Contract”. This document is prepared by the landlord solicitor at your expense and is often done very slowly, and in fact may not be ready by settlement.

You should check as soon as possible on the cost of this document, as prices vary wildly. You do not have an opportunity to shop for prices, as the landlord will choose its own solicitor for it.

Your responsibility after the Contract is signed, (obligations vary slightly from Contract to Contract so check yours), is usually simply to take all reasonable steps to obtain the consent of the landlord to the Assignment. Chasing the documentation is the buyers responsibility.

Business Name, Website, Telephone and other services

Again it is up to the buyer to produce documentation for you to sign, but if you want to avoid ongoing responsibility for electricity, telephone, internet and other services, it is important to take ad direct hand in seeing that these services are cut off from the day after the settlement. This will take them out of your name. Remember, many of these services have security deposits, which should be adjusted off your final bill or returned to you.

Local Authority and State Government Licenses

Most authorities maintain that these licenses cannot be “transferred” or “assigned”, and have to be applied for freshly by the buyer.

Regardless of the wording used, the buyer will be responsible for obtaining licenses in its name for the continuation of the business.

One potential catch for a seller is where the Contract makes the purchase of the business subject to obtaining all of these licenses, and gives the buyer the opportunity to back out if those licenses are not obtained. It is implicit in that situation that the buyer will have to take all reasonable steps to secure that outcome.

Regardless, it will be important for you to be on top of the status regarding each of those licenses, and in direct contact with the licensing authority to ensure that this is happening.

Requisitions on Licences

Some of these licenses have a requisitions regime.

Particularly in a food preparation business, the Local Authority License process often creates a situation where the local authority will indicate that the license can be assigned but only once several requisitions have been completed.

The Contract will usually specify but this is your responsibility, but sometimes will place monetary cap on the value of requisitions which with you have to comply after which it is the buyer’s responsibility to pay. If you believe that requisitions are possibly or likely you should attempt to limit the monetary value of your contribution.

Your Moving Checklist- things to consider prior to signing a contract

2012-01-18T23:02:00.000-08:00

Do you want to hire a removalist or will it be easier (and cheaper!) to do it yourself? You should get some quotes and recommendations from family and friends before deciding on a removalist. Make sure you ask for estimates of time required to pack and unpack a truck.

Are you moving for work? Does your employer have a relocation policy? It's worth checking out for reimbursement purposes.

Do you have appropriate insurance cover for your possessions during transit? Your policy may need revising- contact us for an insurance referral. This would also be a good time to make a list of your household items, not only for insurance purposes, but also for packing. Items of value should be noted personally as well as on your insurance policy, and appraised in case something happens prior to or during your move. Another safeguard would be to photograph your items as a visual record for yourself and your insurer.

Make up seperate file for solicitor's paperwork, bank paperwork, quotes for removalists etc. Also, your important documents should be kept in a central location where they are easily accessible and not likely to be misplaced. There might include:

Personal and family records
Medical and dental information
Veterinary
School records
Legal and Financial documents
Birth Certificates
Passports
Insurance documents

Start cleaning! You're moving- what could be a better incentive to de-clutter!

If you've loaned anything that hasn't yet been returned, now would be the time to take it back.

Take the time to attend to major cleaning items like window furnishings.

Eat for today, or statrt entertaining! this is the easiedt way to clear out your cupboard, fridge and freezer to make for an easier move.

Now that you've signed your contract...30 days prior to moving
What will you need to pack and move? Start putting together:-

boxes, lots and lots of boxes of varying sizes
scissors
masking/ packing tape
bubble wrap, newspaper and tissue paper to wrap valuables
towels and blankets would also be handy for wrapping valuables
labels for your boxes
black texta to write on your boxes
styrofoam beans and cardboard for packing
garbage bags
rope and packing string for securing
bungee cords/ octopus straps
utility knife
wheel burrow for easy transport of larger/ heavier items
back brace/ support
volunteers/ helpers

You'll have an idea of your settlement date by now, so book yourself a removalist. If you're making the moving arrangements yourself without a removalist, make sure you book your truck as early as possible. You'll need to take into account what day of the week you're likely to be moving, as this will possibly affect availability. Mondays and Fridays are normally the busiest because of people wanting to move over weekends, so bear this in mind.

When you have your new home secured, make a layout for your furniture. Now is the time to cull or upgrade- will your current furniture match your new decor? Storage arrangements might also be an option for you to consider.

Try to start packing now. Box up those non-essential items so that you have less to worry about as you get closer to your moving date. Leave the absolute essentials until last to pack. Things like books and DVDs, or all that extra linen can be put away ready to be moved.

You might want to leave valuable or fragile items until last to pack, or maybe have these things set aside to be moved personally by yourself if you have concerns about breakage.

Make some sort of reference for your packing, like colour-coding your rooms. Keep a list or brief description about the contents of your boxes. If you have a large space like a spare room, use this as your storage space rather than leaving boxes all around in different rooms.

Have you given the requisite notice? If you are renting, make sure you have advised your current landlord or agent, in writing, of your intention to move.

If your children will have to change schools, contact their current school to arrange the transfer of their records to the new school. Even if your children remain in their current school, advise the school of your new contact details.

Don't forget those utilities! Arrange to transfer your connections for telephone, electricity, gas, etc from your current home to your new home. Always allow an overlap, just in case: have your current home disconnected the day after you move, and your new home connected the day before you move.

Will you need to undertake some major cleaning or building work? Schedule these as necessary. Make sure you contact a local locksmith to have new locks installed throughout your new home.

Getting closer to moving day...two weeks prior to moving
Time to get down to the nitty-gritty. Speak to your real estate agent and your solicitor about a settlement time so you can arrange your inspections and coordinate your removalist/truck.

Have a garage sale to get rid of those items you no longer want, and make some money to cover those moving costs.

For peace of mind, it may be easier for you to arrange a babysitter for your children on moving day. This way you can concentrate on the move and other last minute things. The same applies with your pets. It can be distressing for them so if they can be looked after by a family friend, then make that arrangement. Alternatively, arranging a kennel for the day might come in handy.

Start making the notifications to change your address with your bank, local post office, billers and subscriptions.

If you are moving interstate and have memberships to various clubs, you may be able to transfer or obtain a refund for the unused period.

Go through your car, drawers and bags to make sure you have all the keys and remotes ready to hand over. If you have any warranites, passwords for security, instruction booklets or general information, leave it together in the kitchen, together with a forwarding address if any of your mail is accidentally sent there.

If you have valuables that you don't want to lose or have anything happen to, consider leaving them with a family member or your bank until after your move.

You're almost there...one week prior to moving
Do a last minute check and take the time to return any borrowed items like DVD rentals or library books. If you have accounts with local businesses, bring those up to date and pick up anything outstanding like dry cleaning.

Are there deliveries or subscriptions to cancel? Do you have any other personal records that need to be transferred?

Put away that shopping list until you've made an eating plan for the remaining week. Think about meals that won't use too many utensils and will help clear out your cupboard, fridge and freezer. Speaking of which, make sure you have an esky on hand for when you empty, defrost and clean your fridge and freezer. You should probably give that stove and oven a good clean too.

Keep aside your cleaning materials for that last big clean before you move, and start throwing out the out of date items and almost empty bottles throughout the house.

Do you need to make any confirmation calls? Double check your removalist is ready to go, as well as any travel or accommodation reservations you've made for moving day.

Give the garden and outside area a tidy up. Run the lawnmower over the front and back yards before draining them of oil and fuel, ready to be moved. Moving companies will not move them if they are full.

Lastly, pack critical items in a travel kit, such as:-

banking information like credit cards, ATM cards and cheque books
your licence or other identification
a first aid kit
clothing and toiletries
keys
torch and other tools
your phone book
paper plates and cups
towels
travel alarm clock
toys and games for the kids
any other personal items

One day prior to moving day
Get those major appliances disconnected and ready to move. If you have beds or other furniture that can be dismantled, now is the time to do it. In case of some computer disaster, make sure you have backed up everything before packing your electronics up.

Cleaning items will most likely be needed at your new home, so pack them last and label your box clearly. Bedding linen will probably be something needed too.

Check that you can pay by credit card or EFTPOS on the day, otherwise you'll need to have cash on hand unless you've made alternative arrangements.

It's finally here! Moving day
Time to pack up that truck and your moving equipment! Make sure that you have your mobile phone with you in case of emergencies, and that someone knows where you are in case you aren't contacable by mobile.

If you've booked a removalist, make sure you have someone at your old house who is available to answer questions. If you are paying your removalist an hourly rate, keep a record of the time they arrive and the time they leave.

If you have boxes or items you want to keep until last or take with you, set them aside in a "do not touch" area and make sure you make everyone aware.

Keep a record of your meter readings, just in case there is a delay in the disconnection. Turn off you gas and electricity at their meters and water at the tap.

Go through and do that final clean, and then a last walk through to check for:

nothing being left in any closets or drawers
all documents for the new owner are left prominently displayed
all lights and switches are turned off
the keys and remotes are kept together to be delivered to the real estate

Now that you're in your new home....
Make sure you or another person is available to answer any questions. Closely check your possessions for any breaks or damage and make a note if this has occured.

Have your utilities been connected? Plug in and check your appliances are in working order and if not, you'll have to organise some repairs.

Collate your receipts and keep everything together until you've had the chance to ensure your belongings are safe and undamaged.

Be careful with your pets. Take the time introducing them to your new home. Try to keep them secured for the first few days so that they can't try to go back to their old home.

A final few things:

contact your transport department to update your address and your registration
contact the electoral roll to update your details
contact your local council for local sports clubs, parks and activities
contact the local paper for a new subscription
enjoy your new home!

Surviving your divorce- Chapter 1: Where to Start?

2012-01-15T16:50:00.000-08:00

1. WHAT DO THESE DISPUTES LOOK LIKE?

All legal disputes have certain common factors and follow a similar process.

Think of a road or a tree diagram with T intersections along the way, at which time you need to take in the surrounding circumstances and make a choice as to whether to go left or right.

Your matter will be like that.

At each of these stages, your advisers be there to help you make an assessment of the facts, look at the options available to you, and choose the one which appears to be the best available.

This choice should always be yours, and your advisers are there to follow your instructions once you have been informed and made that decision.

2. THE INITIAL INTERVIEW WITH YOUR ADVISER

The opening interview should be a self-contained unit designed to give you some kind of knowledge of and control over your circumstances.

The idea of the initial interview, which is normally done as a fixed fee, is to get your story from you, explain the Law, give you an overview of your position, and provide you with some of the tools to make the next few decisions.

You should leave that interview with a general overall knowledge of the battlefield you are entering and some idea of what to do next.

This interview should also explain the role of your adviser and guide.

You may be surprised at the format of this first interview but it should take the form of an information session for you, not a long winded, blow by blow, detailed history of you and your relationship. That can, if necessary, come later.

This initial interview should be all about giving you knowledge not the other way round. You want to know how this process works and the next few steps. Then you can start to come to grips with your surroundings and get a feel for what is going to be happening.

If your adviser doesn’t explain this well enough or in enough detail, press him/her. If you’re still unsatisfied, change advisers!

You should feel comfortable with your adviser and have confidence in the advice you’re receiving. You should also have the feeling that you’re going to be able to understand what you’ll be told in the future. Unfortunately, some lawyers, even today, whilst having very good technical knowledge, don’t have good communication skills and are unable to speak a language others can understand. You do not need a long list of latin phrases and complex explanations from your adviser.

That communication style is your lifeline to good decision making. Remember you’re paying for this; get an adviser you can understand and who can relate to you.

3. DOCUMENTS AND PAYMENT

You may be asked to make payment at the commencement of the legal process. You should ask in advance what the credit arrangements for your adviser are and ensure you have this clear in your mind. Lawyers are required by the Government to give you a written document to sign before you become responsible to pay them anything. There are minimum requirements of disclosure by law firms in this document (called a client agreement or costs agreement).

You must be allowed the opportunity to take this document away.

Only once you are happy that you understand and comply with these requirements, should you sign and engage this adviser.

Some law firms will hold their fees until the end of the matter. If you have assets tied up which will eventually come to you when your argument is settled, you should ask about this possibility. Ensure though that there are no additional or hidden costs in doing it this way.

In some cases Litigation funding is also available. Check however that the rate you are charged is acceptable. Litigation funding is like any other personal loan to purchase something. If you can obtain funding from some other source, or get a loan secured by property, you will pay a lower rate.

4. WHAT TO BRING

Bring along any documentation which is relevant to your situation, correspondence, Orders, figures, bills, anything which you believe might be relevant. If in doubt – bring it along. Practices differ between firms of lawyers. Some will want the originals, some will take copies and return the originals. If your matter escalates into a court action you will need to produce the originals at a later time, so it’s important to know where they are.

5. COMMUNICATION

Clear, simple, jargon free communication is the key to good advice.

If you are not getting information you can understand and the process is not suiting you and bringing your anxiety levels down, say so. If the situation does not improve, CHANGE ADVISERS.

This situation is too important to put up with advice that you find difficult to understand and make decisions upon.

6. WHAT WILL YOU GET OUT OF THIS FIRST INTERVIEW?

At your first interview you should:

(i) get to know your adviser, understand the communication style and become comfortable with it;

(ii) establish some rapport with the firm in general;

(i) tell your story in full to your satisfaction and that of your adviser;

(ii) get an overall view of the process and how it relates to you;

(iii) understand how the Law relates to your circumstances;

(iv) understand what are the next few steps;

(v) find out what the options are for you during those steps;

(vi) begin to know what you can do about the problems facing you;

(vii) leave better equipped and feeling more in control.

If you do not achieve these goals at this interview, say so. If you feel you are not going to achieve them, CHANGE ADVISERS.

7. ASKING QUESTIONS

You should always feel like you can ask questions of your advisers.

You should be aware though that Lawyers sell their time. It is their stock and they sell knowledge; answers to questions.

These answers will increase your costs, so consider your questions and do not use your law firm as a group of counsellors to make you feel better. This is very expensive counselling. Ensure you seek advice from and give instructions to your Lawyers and keep this process clear and clean.

Often, in family law disputes, the law seems unfair and unbalanced. It is true that, since the 1970’s when the Commonwealth Government brought in the Family Law Act, allowing parties to divorce, make arrangements for their children and settle their property, virtually every concept in the (then new) “no fault” system was challenged and argued as too biased in favour of one party or another (often both at the same time).

Over the last three decades or more, some progress has been made but the Act which the Court interprets and through which your adviser navigates and guides you, is still controversial and at times seems unfair.

Try to walk the line between questioning your adviser about these issues (and challenging your adviser to fully explain these issues) and wasting your own money arguing with your adviser about how unfair this is when they cannot do anything about the problem.

This is a common trap into which people fall. They waste endless time (and money), effectively saying to their advisers, “this is outrageous; you have to change this; demand my ex complies with the attached list of demands”, when the plain fact may be that the Act and the Courts will not compel compliance and that particular issue cannot be resolved through an aggressive demand.

Your adviser’s job is to show you options to get to these goals using the Act and the court rules, and also to put these issues in perspective regarding the entire matter. It may be that because of some other legal issues, the thing you’re most concerned about is not an issue in the broad scheme of things.

Make your adviser show you this to your satisfaction. You do not have to swallow whole everything you’re told at face value. Remember you’re paying for this.

Try to avoid though, a long running, useless argument with your adviser, at your expense regarding whether or not it’s fair.

8. OPTIONS FROM HERE

After your initial interview you can:-

(i) instruct your Lawyers to start acting and get on with the matter;

(ii) go away and think about the process, make your decisions and return once you have done so;

(iii) consider taking the next step or two without assistance if that is tactically beneficial and you feel confident.

There will be times when speed is important. You may for example need to have your adviser act quickly to secure assets which are not in your name. There may be property or other assets which can or are about to be hidden. There may be issues of protection for you and/or your children.

Your adviser will understand this and should communicate this to you. You need to feel satisfied and comfortable that this is the case though.

Your adviser may well give you the impression that there is no option but for you to proceed with him/her from here. This is not the case!

You should, after this initial meeting, unless any issues of urgency exist, take time to ensure that you’re comfortable with your adviser and all you’ve been told.

Often that’s a feeling you have straight away, sometimes it takes some reflection. Don’t be rushed. There is an important balance between protecting your rights and position, and feeling like you’re immediately losing control and a passenger on a journey to an unknown destination.

If you have the latter feeling:

a) hold off; it may be that your adviser is not the right one for you;

b) you may need to instruct them to take the urgent steps to protect you or your assets, and then consider making a change. This is not ideal but is not a difficult as it seems. Think changing banks or credit card providers as an equivalent of the amount of drama involved.

Personal Property Securities Register (PPSR)

2011-12-15T18:21:00.000-08:00

Þ This is a new Commonwealth law. The commencement date is 30 January 2012

Þ From this date Queensland's REVS (motor vehicle), Bills of Sale Register and Register of Cooperative Charges will be rolled into Commonwealth Register. It will provide a one stop shop for all registered encumbrances over assets other than company charges and land.

Þ Searching the Register (PPSR) requires either an account or can be accessed as a guest (pay as you go if guest user).

Þ Search criteria will include grantor details, serial number of property (if applicable), and vehicles will be searchable by serial number

Þ The law provides for penalties against misuse of information contained in PPSR

As a Buyer: -

Þ This applies to personal property not including land or building or a fixture

Þ Personal property includes cars and other vehicles, art, aircraft, intellectual property, contract rights, crops, livestock, machinery,

Þ Search facility allows you to confirm any security interest in your proposed purchase to ensure no repossession by lender after purchase

As a Grantor (person granting the security over their property): -

Þ The Grantor uses personal property to secure lending, business assets as security for lending (example given is that of fixed and floating charge), title retentions (leasehold rather than freehold), or leases personal property for extended periods of time (ie cars, equipment)

Þ Grantor's details can be included in PPSR where no description can be provided for the personal property – organisations provide an identifier; individuals provide name and date of birth

Þ If information listed in PPSR is incorrect, Grantor needs to contact Secured Party (Lender) to request amendment

Þ Upon disposal of personal property, Grantor needs to contact Secured Party to obtain relevant discharge/release

As a Secured Party: -

Þ A Secured Party has a secured interest in personal property of the Grantor such as fixed and floating charges, long term and finance leases, chattel mortgages (interest free purchases like TVs), title retentions, commercial consignment and factoring

Þ The law has default and specific rules as to registering personal property with priority which take into consideration:

ü control of personal property

ü competition existing between security interest and statutory interest.

Changes to REIQ Contracts

2011-12-15T18:06:00.000-08:00

The REIQ has brought out a further edition of the House and Land Contract. There are several important changes that we should all be aware of.

Seller must give notice of whether the property is affected by an application in relation to a tree on the land and if the property is affected, a copy of the application must be given to the Buyer prior to signing the contract.

Rent paid by the Buyer to the Seller prior to settlement forms part of the "Balance Purchase Price"

"Encumbrances" includes unregistered encumbrances, statutory encumbrances and security interests. This will be important as there is new legislation coming dealing with Personal Property Security (PPSR) (security over personal items such as washing machines etc which are bought on credit).

"Security Interests" means all security interests registered on the PPSR over included chattels and improvements

"PPSR" means "Personal Property Securities Register", which will take effect early 2012

The Seller must upon request provide a written statement with supporting evidence of outgoings and rent for the property which would not otherwise be available by way of search

The finance clause can be satisfied after 5.00pm on the due date instead of only either waiving the clause or terminating, but the Seller maintains their ongoing right to terminate for failure to notify

The building and pest inspections clause can be satisfied after 5.00pm on the due date instead of only either waiving the clause or terminating, but the Seller maintains their ongoing right to terminate for failure to notify

In relation to the pool safety inspection, if no certificate of either safety or non-conformity is provided then the Buyer can waive or terminate. If a certificate of non-conformity is issued then the Buyer can terminate provided they act reasonably; the right to terminate is lost once a pool safety compliance certificate is issued and the receiving party must notify the other of same being in effect; the Seller is entitled to a copy of a non-conformity certificate.

The Seller must provide any instrument necessary to release any encumbrance over the property. This will include any PPSR release.

Þ "Suspension of Time" is now provided for in the case of a natural disaster; no party is in breach of contract; time of the essence is suspended and settlement is to be effected upon issuing Notice to Settle; once Notice to Settle is issued then time becomes of the essence again

Þ Warranty given by the Seller under 7.6 excludes notices given regarding application in relation to a tree on the land

Þ Work required by a local authority on the property excludes notices given regarding application in relation to a tree on the land

Þ If the property is declared acquisition land then the Buyer is entitled to terminate if this has not been disclosed

Þ The Seller must use the property reasonably until settlement; the Seller must not do anything regarding the property or tenancies that may significantly alter them or result in later expense for the Buyer; if the Seller is issued with a notice, proceeding or order in relation to the property they must give a copy to the Buyer straight away; the Seller must seek the Buyer's consent before giving any notice or seeking consent to any order that affects the property

Þ If requested, the Seller must provide to the Buyer copies of all security interests or sufficient details of the security interest to allow the Buyer to undertake a PPSR search

Undue Influence in Estate Planning

2011-12-12T17:15:00.000-08:00

There is a growing area of dispute relating to Wills, which is centered upon undue influence.

This area involves claims by beneficiaries (or would-be beneficiaries) of Wills, that someone has influenced the person who signed the Will (the Testator) to make a distribution which shortchanges the complaining beneficiary.

The area is not well signposted by the law, and there is a lack of clarity regarding was is undue influence.

The most common scenario is this:-

A parent has several children. One child either has remained to live with the parent, or performs a significantly higher proportion of the support services (shopping, trips to doctor, cleaning, companionship etc) than the others.

It is quite common to see this child appointed sole executor, and there is no issue with that, as the position of executor (apart from the very rarely used right to be paid for the job) is a set of responsibilities, not a set of benefits.

Very often, however, we receive instructions from the parent to make an additional distribution to this child, beyond that to the other children.

Again, of itself, that is not unusual, improper or unsupportable.

Inherent in that kind of relationship, however, are the seeds of an argument for undue influence.

Obviously, those two parties are close and usually have a special relationship.

The child will often hold a Power of Attorney for the parent. The child will undertake financial and transport obligations, and it is often this child that carries out an instruction to organise for a Will to be prepared.

The record will show that it is the child that rang the law firm and engaged the firm, on behalf of the parent, to prepare the Will which favours the child. This is logical when you think about it but can be the beginning of the argument that undue influence exists

How do you stop a claim of undue influence being made?

You can’t. Any person who fits the definition of next of kin, who has a right to bring a claim for provision before the Court, can make such a claim.

How do you crush the prospects of success of a claim for undue influence?

There is a whole range of activities which will limit the prospects of success of such a claim.

If this range of steps is done well, someone thinking of making a claim may well withdraw or not make that claim because it seems hopeless. This is the outcome that a well drafted Will, following a clear and sensible preparation process, should achieve.

Indicators supporting possible undue influence

1. Were we contacted by someone other than the testator?

2. Who made the appointment?

3. Does the person live with the testator?

4. Do they live together alone?

5. Is the person receiving more than other siblings?

6. Who made that suggestion?

7. Were the two together in the building at the time of instruction?

If any of these are present then:

A. explain at the first opportunity the principal of undue influence to each of the two of them;

B. exclude the third party (TP) from any further contact with us regarding the matter, including the possibility of intercepting drafts (as far as possible);

C. bring the TP into the first part of the instructions interview and explain together, again, the undue influence process, making particular point to testator that the allegation of influence could complicate estate process;

D. ask testator if other children/beneficiaries are aware of any skewing of distribution of assets;

E. then remove the TP from the area and away from earshot;

F. do not use TP as interpreter. Hire an interpreter if necessary;

G. ask the following questions:

(i) are you certain you want to leave more to TP than to others in that category of beneficiaries?

(ii) Why?

(iii) have you thought about how others will feel about this?

(iv) is how they feel important?

(v) what has TP done in addition to others to warrant this?

(vi) what have others not done?

(vii) can I put something to this effect in Will?

(viii) if not why not?

(ix) how did you come to this conclusion?

(x) have you made this decision voluntarily?

(xi) has TP been consulted?

(xii) what was his/her involvement?

(xiii) have you considered inter vivos gift instead?

(xiv) has any threat/promise of any kind been made to you in relation to this distribution?

Ingredients for avoiding or crushing undue influence claims

1. Communication.

It is essential that the testator communicate to all beneficiaries that a Will has been prepared which favours one individual, that that Will has been made voluntarily, and that the testator wants his or her wishes honoured in full. It is important that the message is communicated to all the beneficiaries that the decision has been taken after much thought, voluntarily, and without any threat or promise having been made by the favoured beneficiary.

2. Medical evidence.

If there is even the slightest indication of a possible argument that the testator did not have capacity to understand the nature and effect of the document, get a medical report disproving this.

3. Choose a law firm with specific skills in dealing with Will preparation.

Any law firm should be able to prepare a Will. If your Will (or that of your parent) fits into the category described above, you need a firm with experience beyond the basic Will.

The law firm should immediately recognise (and have triggers and processes for) any circumstances which might support a claim of undue influence.

The firm should in fact beat you to pointing out the undue influence trigger, and explain its processes for assessing, dealing with and defeating the circumstances of undue influence.

If you are aware of any of the circumstances outlined above, point them out to the lawyer in question and ask what is their process for dealing with and managing the circumstances.

How a law firm will/should deal with undue influence issues

1. A joint explanation of the undue influence issue followed by exclusion of the beneficiary from the interview.

2. A restatement of the potential issue, and explanation that some questions need to be asked in order to protect the enforceability of the Will, and then enquiring of the testator about why and in what circumstances the decision was made to favour one beneficiary.

THERE IS NOTHING WRONG WITH LEAVING YOUR ASSETS IN AN UNUSUAL, LOPSIDED
OR PARTICULAR WAY
.

It is important that, when you sign your Will, you feel as though it reflects your wishes, it gives you peace of mind, and you do not feel like you have been forced to compromise or do something that you would rather not.

If, however, you are in the circumstances described above, or something similar, and if you do wish to favour one person over others in a similar position, then it is essential that you say why in the document. A short sentence explaining:

(a) why you are favouring the beneficiary;

(b) that you have done so voluntarily and after much thought;

may well make all the difference to the enforceability of the distribution, or prevent a wavering potential claimant from going ahead.

“How to get started for Divorce Settlements” Legal Advice by Warren Tegg of Bennett Carroll Solicitors- Head of Family Law

2011-12-08T21:39:00.000-08:00

“How to get started for Divorce Settlements”

Bennett Carroll Solicitors head of the Family Law department, Warren Tegg, provides Family Law advice.

Web: http://www.bcglaw.com/

Facebook: http://www.facebook.com/pages/Bennett-Carroll-Solicitors/196139377080162?ref=ts

YouTube: http://www.youtube.com/user/BennettCarroll

Blog: http://bennettcarroll.blogspot.com/

“Maintenance and Child Support Explained” Legal advice by Warren Tegg of Bennett Carroll Solicitors- Head of Family Law

2011-12-07T18:29:00.000-08:00

“Maintenance and Child Support Explained”
Legal advice by Warren Tegg of Bennett Carroll Solicitors- Head of Family Law

Bennett Carroll Solicitors head of the Family Law department, Warren Tegg, provides Family Law advice.

Web: http://www.bcglaw.com/

Facebook: http://www.facebook.com/pages/Bennett-Carroll-Solicitors/196139377080162?ref=ts

YouTube: http://www.youtube.com/user/BennettCarroll

Blog: http://bennettcarroll.blogspot.com/

The 2011 Board Meeting Charity Surf Contest

2011-12-06T15:25:00.000-08:00

About the Event:
The event, which started in 2003, is run in early November each year (this year was November 4 and 5) and draws on the enthusiasm and generosity of the Surfing and Business communities to participate in an amateur surfing competition where the emphasis is on fun.

This year we held the opening presentation & drinks at the Kawana Surf Club on the Friday, with the competition run on Saturday along with the charity auction. The organisers and beneficiaries would like to thank the Kawana Surf Club for their support.

Results:
To date, the charities profits from the 2011 Charity Surf event were $38,391.25, with more donations rolling in.

This is our best year yet and we couldn’t have achieved it without our committee members, sponsors and of course the Sunshine Coast Community.

Photo Contest Winners:

This year, we also held a Photo Contest for the Students of TAFE with first place having their image published in the Sunshine Coast Surf Magazine with a feature story on the event.

Crys-kai Carroll from Sunshine Coast Surf Magazine chose the winner of the surfing category as Janneke Storm and said “Janneke’s shots where framed correctly and they captured the surfers in the best position. I also liked how the photographer has used different exposures which have enhanced the quality of the shots”.

Brett Peters from Camera House selected Callie Codd’s image as the winner in the General Category, he said “I thought the photo showed the true feeling of the day, Having Fun. There is great colour and the water activity is awesome”.

Brett has posted the pic and some info on our their Facebook page, Camera House North Lakes. Callie will receive a $200 Camera House voucher.
We would like to congratulate all of those who participated in the event as they all captured the day perfectly. Please wish them the best for the future from us and thank them sincerely from the charity.

For more info:

Please see The Board Meeting website : www.theboardmeeting.org
Or The Board Meeting Facebook page : http://www.facebook.com/theboardmeeting.org

"What are my options when my franchise is up for renewal?" Franchise Advice from a Lawyer

2011-12-05T16:29:00.000-08:00

"What are my options when my franchise is up for renewal?" Franchise Advice from a Lawyer
Bennett Carroll Solicitors CEO, Guy Gibbons provides free legal advice to anyone buying a franchise.
Web: http://www.bcglaw.com/

Facebook: http://www.facebook.com/pages/Bennett-Carroll-Solicitors/196139377080162?ref=ts

CONTRACT NEGOTIATION – TACTICS & STRATEGY

2011-11-30T17:29:00.000-08:00

Your approach to the contract negotiation process will depend upon a range of variables, some of which will be beyond your control.

The most obvious example of this is the attitude of the buyer who may employ a range of different approaches, and will have priorities and processes which will probably only be partially known to you.

Obviously, the buyer’s attitude approach and priorities, will have a major effect on how the negotiation proceeds, how far it gets, which contract variables are altered or conceded, and ultimately whether you get a deal at all.

There are several important things to remember when stepping into this process:-

BEGIN WITH THE END IN MIND

As the seller, by setting the initial parameters for negotiation, you have some control over where the process begins. Your broker (if you have chosen the broker well), should have been conditioning the buyer, and attempting to set expectations, throughout the purchase introduction process. The broker (and you if there have been face to face negotiations), should have given a fairly clear indication of the variables in the contract which are important and/or non negotiable. Having said that, most things are negotiable to some degree. Your initial approach and parameters, should be set up to allow some room for negotiation by the buyer, and give a reasonable expectation to the buyer of what you will and won’t accept, whilst at the same time being somewhere near reasonable.

You and your broker should have discussed this, and have a strategy in place.

DECIDE WHAT’S IMPORTANT

It is exceedingly rare for the buyer of anything, let alone a business, to step up and immediately agree to every variable of the deal. It is important for you to decide which variables are important and which ones are not.

There are essentially three categories and variables for you to consider:-

Central and not negotiable
Central and negotiable
Throwaways

a. Central and not negotiable

Examples of this category might be an absolute requirement for a guarantee from a purchase of company, or the requirement for the buyer to obtain a new Lease rather than an assignment of the existing Lease. The purchase of a business with the assignment of an existing Lease renders you liable for rent to the landlord, for the balance of the rental term. If this is a significant amount and you have concerns about this ongoing liability, a requirement for a new Lease will rid you of this liability. Likewise, where you have a purchaser that is a company, and you are uncertain as to its asset base or solvency, a guarantee from the directors (and, these days, the spouse(s) of the director(s)), is really quite essential.

b. Central but negotiable

The purchase price is the most obvious example of this situation. The amount you receive as the sum of your business, it’s critical for your future, but you can certainly expect the buyer to want to reduce the price. It is quite common for contracts to be received which have several prices crossed out, one after the other, before a final figure was reached.

c. Throwaways

A good example of this is the restraint clause.

The buyer might well be extremely keen to see you out of the industry for a significant period of time. If you are leaving the industry entirely, and have no plans to return, this is something you might throw away, in exchange for, for example, keeping the purchase price higher. All this will need to be negotiated during the contract completion phase.

The role of the broker

The broker will earn significant permission on the sale of your business. The brokers role is to find and introduce a buyer who is ready willing and able to complete.

The broker should also be assisting you with:-

Conditioning the buyer to the important parameters of the deal, upon which you will not compromise;
Relaying important information to you about the buyer’s priorities and attitudes;
Manoeuvring the buyer towards a contract which best suits you.

Many people, buyers particularly, make the mistake of assuming or believing that the broker is an unbiased mediator between the parties. This is untrue.

The broker quite literally and legitimately, is your agent, and, if he or she wants a commission, must act in you interests to get a contract together.

The other side of this coin however, is that the broker cannot act in a false or misleading way. The broker is your agent and you will be responsible for any improper conduct undertaken on your behalf. It is not a sustainable approach from either you or the agent, to attempt to hoodwink the buyer into buying a business, as, at some stage either before or after settlement, the true facts will come to light and you will be held accountable for the acts of your agent.

Having said all of this, an enthusiastic and skilled broker can create appropriate deals where each party “wins”, where, in many other circumstances, a deal will not materialise.

The broker is also a worthwhile circuit breaker between you and the buyer. It is very often extremely worthwhile to be able to deliver information through a third party, and avoid directly having to answer questions on the spot. Having the broker relay information, allows the possibility of time for thinking, and ensures the provision of appropriate information.

The broker is also (or should be), a skilled negotiator, focused solely on the sale deal. Remember, in these circumstances, you will still have the business to run, and this must remain a focus.

NEGOTIATION STYLES

The character, personality and approach of the buyer is a major variable in the contract negotiation process.

There is a large number of types of approach and list below is by no means exhaustive.

Some of the styles of negotiation which are often seen are as follows:-

1) Direct clear and simple

2) “Soviet style”

3) “Chinese Style”

4) Pushy

5) Round and round

1) Simple Clear and Direct

This is the buyer who displays a “what you see is what you get” approach. The buyer presents a contract with variables that are somewhere within the bounds of what you consider to be a deal, and is willing to respond to a counter offer that you might make. Responses to your proposals are returned in a timely way and the negotiation proceeds at a reasonable pace. These are the easiest buyers to deal with.

2) Soviet Style

Soviet style negotiation (named for the cold war negotiating style brought to prominence in 60’s and 70’s), opens with assumingly impossibly low offer and then proceeds at snails pace with tiny concessions away form that original position.

An example of this approach would be that if you have indicated a purchase price of, say, 20 with an expectation that you might settle it around 16 or 17, the Soviet style negotiator’s first offer will be 4, and might then proceed very slowly to 5 or 6.

In the face of an extremely low offer, particularly initially, the best options are:-

a) withdraw from the negotiations and brand the offer ridiculous;

b) Refuse to make a counter offer until the serious proposal is put forward

c) Feign insult and go silent.

3) Chinese Style

This style of negotiation, much applied in South East Asia, involves running a negotiation over long time frames. Each issue dealt with one by one, and, similar to Soviet Style, concessions are small and well spaced apart. This style of negotiator is looking for somebody who is impatient or desperate, and will attempt to make a “big concession” to bring the matter to a close. Patience is the key with this style of negotiation and you must walk the line between keeping the matter going at a reasonable speed, and, at the other extreme, appearing needy or anxious.

The best response to this style of approach is to attempt to meet the size of the concessions being made, with the size of your own concessions, and try to be patient. Making large concessions to attempt to prompt similar large concessions from the buyer, will not work with this type of buyer. This may be frustrating but trying to force the pace will be interpreted as desperation, and you may well end up with deal parameters well below your expectations.

4) Silent approach –

Some buyers will make an offer and then go silent

Transfer Documents

2011-11-30T17:16:00.000-08:00

There's a small suite of documents and a clutch of processes that go with them, designed to transfer to the buyer the tangible and registrable assets that make up the business. In most cases it is the buyer's responsibility to create the documents that create these transfers, and you simply need to sign and return them.

You need to be aware however of the process.

Lease
In some jurisdictions the Lease Transfer is made up of two documents; the Assignment of Lease itself, and a Deed of Covenant.

The Lease Assignment document (it may be called the Transfer or a Deed of Assignment depending upon the type of lease you hold), will be prepared by the buyer and sent to you to sign and return. That document effectively transfers any rights that you have in the Lease. You should not return it unless you receive a written undertaking from the solicitor to the buyer, that the document is not to be used pending settlement. If you do not receive this Undertaking, do not return the document. Do not accept this Undertaking from the buyer itself. An Undertaking from the solicitor is an enforceable undertaking able to be pursued both through the Courts and through the Solicitor's disciplinary body. An Undertaking from the buyer itself is worthless.

The Deed of Covenant is a document designed to create a direct link between the buyer and your landlord. It enables the landlord to sue and creates what is called "Privity of Contract". This document is prepared by the landlord's solicitor at your expense and is often done very slowly, and in fact may not be ready by settlement.

You should check as soon as possible on the cost of this document, as prices vary wildly. You do not have an opportunity to shop for prices, as the landlord will choose its own solicitor for it.

Your responsibility after the Contract is signed, (obligations vary slightly from Contract to Contract so check yours), is usually simply to take all reasonable steps to obtain the consent of the landlord to the Assignment. Chasing the documentation is the buyers responsibility.

Business Name, Website, Telephone and other services
Again it is up to the buyer to produce documentation for you to sign, but if you want to avoid ongoing responsibility for electricity, telephone, Internet and other services, it is important to take a direct hand in seeing that these services are cut off from the day after the settlement. This will take them out of your name. Remember, many of these services have security deposits, which should be adjusted off your final bill or returned to you.

Local Authority and State Government Licences
Most authorities maintain that these licenses cannot be "transferred" or "assigned", and have to be applied for freshly by the buyer.

Regardless of the wording used, the buyer will be responsible for obtaining licenses in its name for the continuation of the business.

One potential catch for a seller is where the Contract makes the purchase of the business subject to obtaining all of these licenses, and gives the buyer the opportunity to back out if those licenses are not obtained. It is implicit in that situation that the buyer will have to take all reasonable steps to secure that outcome.

Regardless, it will be important for you to be on top of the status regarding each of those licences, and in direct contact with the licencing authority to ensure that this is happening.

Requisitions on Licenses
Some of these licences have a requisitions regime.

Particularly in a food preparation business, the Local Authority License process often creates a situation where the local authority will indicate that the license can be assigned but only once several requisitions have been completed.

The Contract will usually specify but this is your responsibility, but sometimes will place monetary cap on the value of requisitions which with you have to comply after which it is the buyer's responsibility to pay. If you believe that requisitions are possibly or likely you should attempt to limit the monetary value of your contribution.

How do I know if I am buying at the right price? - Franchise Advice from a Lawyer

2011-11-27T20:42:00.000-08:00

How do I know if I am buying at the right price?

Bennett Carroll Solicitors CEO, Guy Gibbons provides free legal advice to anyone buying a franchise.

Web: http://www.bcglaw.com/

Facebook: http://www.facebook.com/pages/Bennett-Carroll-Solicitors/...

What questions should I ask the franchisor prior to purchasing a franchise?

2011-11-24T19:45:00.000-08:00

Bennett Carroll Solicitors CEO, Guy Gibbons provides free advice to anyone buying a franchise.

Web: http://www.bcglaw.com/

Facebook: http://www.facebook.com/pages/Bennett-Carroll-Solicitors/196139377080162

New Federal Asbestos Legislation

2011-11-23T19:26:00.000-08:00

If your workplace or commercial holdings were constructed prior to 31 December 2003, then the new federal asbestos laws will apply to you.

You will need a current Asbestos Register and current Management Plan to comply with legislation commencing 1 January 2012. You will also need to ensure your reviews are up to date.

If you do not have a current Asbestos Register or current Management Plan and have not had a review, Quality Building Management (QBM) can take steps to ensure you comply with legislation.

After the Contract is signed

2011-11-03T21:22:00.000-07:00

The mechanics of the business sale process, and the timing of certain steps, can be very critical to the success of the Contract, and if done incorrectly or in the wrong order, it can cause lasting damages to your business.

Time of the Essence
Any Contract will have in it the expression, "time is of the essence". This obscure little sentence can profoundly affect the party's rights.

What it means, in effect, is that, unless the parties agree otherwise, all of the time limits specified in the Contract, are set in concrete, and failure to comply with those time limits will gain one party rights, and lose the rights of the other party.

It is essential that you diarise each of these dates (Finance, Due Diligence and completion are the most obvious ones), and understand the consequences of non-compliance.

Due Diligence
Most "standard" template Contracts do not have a Due Diligence clause. It is most often inserted as a special condition. Unfortunately, many times, the wording of this clause is composed by the broker or, worse still, by the buyer.

There are subtle variations in Due Diligence clauses. Some will simply say that the buyer is able to make various enquiries and if the buyer notifies by the Due Diligence date, that the enquiries are unsatisfactory, the buyer may terminate the Contract. Other (the ones which favour you) will deem the Due Diligence satisfactory unless you are notified otherwise by the Due Diligence date. Yet others will create a specific obligation upon you to provide material by a particular date, and the Due Diligence will not start until all of that material has been provided.

Some clauses will give you a right to terminate if you don't hear anything by the date, but the option to proceed on to completion.

The wording of these clauses is absolutely critical.

Finance
In the same way as Due Diligence, there are subtle variations in finance clauses. The main variations are, if finance is not concluded by the date:-

a) The buyer may terminate, but if nothing is done, finance is deemed to be approved;
b) The Contract is automatically over;
c) The buyer may terminate, but if nothing is done then you have the option to press on to completion;
d) The buyer may terminate but if nothing is done, then either party has the right to terminate at any time before completion.

This last clause, though not common, is the most dangerous, because it gives you an uncertainty, right up until the date of completion. The current Real Estate Institute of Queensland (the Real Estate Agent's Union), standard Residential Contract, contains just such a clause. It is designed to give the agent the best chance of securing a commission, but does nothing to help either of the parties.

Unlike a Due Diligence clause however, even if the buyer is unable to get finance, there are still obligation. You are entitled to call for evidence that the buyer has made reasonable efforts to obtain finance in the amount and from the organisation, listed in the Contract. For this reason, when it comes to inserting details of the financial institution and the amount required, into the Contract, it is in your interest to have those parameters placed as widely as possible.

The Lease
The mechanics of the Assignment of Lease will, in the same way, be contained in the Terms of the Contract. There are slight variations from contract to contract and State to State.

Most, however, place the obligation upon you to make reasonable efforts to secure consent from your landlord to the Assignment of the Lease. This is principally because you have the contractual relationship with the landlord, and is in your interest not to have the buyer directly quizzing the landlord.

Unfortunately, most landlords are disinterested in taking diligent steps to make a decision about a new tenant. Most solicitors for landlords do not care about preparing documents in a timely fashion, in order to assist you with your transaction. Consequently, it is important to get this process started as soon as possible, by approaching the landlord and asking specifically what the requirements are for consent to Assignment of the Lease.

Landlords have wildly varying requirements all the way from "Oh just send me a short summary of who they are and it will be alright", through an informal list of assets and liabilities, and perhaps a face to face meeting, all the way up to a formal multi page application, requiring the provision of certified copies of financials, and an in depth assessment of industry capability.

Whatever those requirements are, you need to obtain them and pass them onto the buyer as soon as possible. You may then have to take a hand in ensuring that the material is provided. In practice, the solicitor for the buyer will take it from there, and will chase all the material. This does not mean that you should abdicate that responsibility.

With respect to protecting your staff from the anxiety of worrying about the sale of the business, it is important that you consider the confidentiality aspects of contact with your landlord and with the buyer. If the knowledge that you have signed a Contract to sell the business is sensitive and likely to cause destabilisation (as it would be in most cases), some confidentiality obligations for all of the parties, until particular milestones have been completed, would be very worthwhile. Again, this is mostly missing from standard Template Contracts.

Most Contracts are subject to and conditional upon the Assignment of the Lease. After all, what is the buyer buying, if the buyer can't get the right to occupy the premises? Beware, however, that some Template Contracts surreptitiously compromise those rights of the parties in the REIQ Template Contract, are lost, if the buyer enters into pre-contract training. This may be to your advantage.

The message is, "make sure that you know the terms of your Contract".

Assignment on Different Terms
Some landlords presently are using the consent to assignment process to attempt to get more security and comfort from a new tenant. Traditionally, landlords have accepted Directors's Guarantees, or alternatively a Rent Guarantee (sometimes called a deposit bond). A Rent Guarantee is, in effect, a cheque for between three and six months rent, provided by your bank, which can be cashed immediately, without reference to you, in the event that you default. You pay a relatively small quarterly fee to your bank to have this facility available, and, for larger tenants where the directors are perhaps not all shareholders, it avoided the need for Directors' Guarantees. In hard times, landlords have seized upon the assignment request as an opportunity to seek both a Rent Guarantee and a Directors' Guarantee.

Landlords are also routinely now asking for guarantees from spouses, having realised that the director presented by the buyer may not have any assets at all. Many standard business Template Contracts are silent as to whether any assignment consent will do. This is another item to check in your Contract, when it is presented to you for signing.

What is your number one tip- legally- for anyone buying a franchise?

2011-10-31T17:28:00.000-07:00

Bennett Carroll Solicitors CEO, Guy Gibbons provides advice to anyone buying a franchise.

Merging with a competitor

2011-10-23T19:44:00.000-07:00

Introduction

In difficult and uncertain times, business owners are always on the lookout for alternative strategies to future-proof profitability.

It is in tough times that new strategies emerge.

Of late, we have seen businesses exploring and considering new structures and alliances which could broadly be considered "mergers", with similar businesses.

Structures do not necessarily extend all the way to a full-blown 50/50 partnership with a direct competitor. There are subtle but significant variations on this theme.

In fact, the full equal partnership of two identical competitors is probably the most rare of the possibilities.

Alternatives being seen in the marketplace are:-

(a) A sale which looks like or is called a merger;
(b) Merger of complimentary businesses;
(c) Co-operative arrangements.

A Sale which looks like or is called a merger

We hear of mergers everyday, but the reality is that many of them are actually business sales barely disguised as mergers. One business will buy another, the Principal of the selling business will remain as a Consultant for a time, and then depart. This is not a merger.

Merger/ Partnership

A merger in the sense that most people will recognise it, where each party buys a percentage of the other, and the Principal Shareholders of each company enter into a Partnership to run the combined business, does still happen, and we were recently involved in a three-way merger in the construction industry. Even then however, with that particular deal, there were still complex negotiations, formulas and arrangements with respect to keeping and retrieving clients in the event that the merger did not work, and each of the three venturers had different segments of the same market. The voting rights, casting votes and rights of veto for different types of decisions were also complex between the three parties. Nonetheless, it can be done and profitably.

Complimentary Businesses

One thing we are seeing more often in the marketplace, is a merger between businesses that do not compete, but are more vertically aligned.

We recently saw this in the solar industry with a group of Companies each taking a stake in the other. The first was an importer and wholesaler, the second a call centre and sales organisation, and the third a specialist retailer and installer. The three Principals took strategic stakes in each other's Companies (not equal Partnership), and, with the benefit of cross-supply agreements, each reaped the benefits of increased and stable sales, at better net margins. The principal issue there was, ensuring that the trading agreements between the three companies worked properly and that the parties could untangle themselves if required.

Co-operative Arrangements

Another structure emerging in these difficult times amounts to, at its most basic, sharing of resources across Companies. It might be as simple as sharing IT resources, or a formal arrangement for sales staff to sell the products of both Companies (recently seen in the the IT industry were sales people from organisations which have the same target market, regularly sell the products of two or more companies). There is then a formula for recognition and reward to the party that made the sale.

Important Points to Remember

1. Be clear about what you want. It is essential that both parties articulate clearly how they believe the process will work, and the benefits expected. The arrangement, whatever the structure, will very quickly unravel if the parties have different expectations of each other, and of the arrangement.

2. Documentation. The arrangement, even if it is a simple co-operative selling arrangement, needs to be documented. The initial material may never need to be used or looked at, if the arrangement works, but it must still be there in the event that there is either a disagreement, or that the arrangement needs to be unravelled.

3. The Effect of Culture. If the organisations are to merge completely, there might be all sorts of benefits:-

Economies of scale, pooled resources, streamlines staff and stock, more efficiency, larger client base, better product reach.

None of these things will make any difference if the two groups of people are not successfully brought together. The merger of two large Australian Banks in the early 1980's, is clear evidence of this, with senior staff for the balance of their careers describing themselves as one or the other. The cultural divide was never bridged and productivity was hampered as a result.

If the arrangement is to be a true merger, a very clear plan, not just for the logistical issues, but for how to bring the people together, is absolutely vital. More than that, a realistic assessment of whether this is likely, and if not, the effect upon the key non-owner-stakeholders, needs to be made.

1 plus 1 does not always equal 2.5, and can often equate less than 2.

Both parties need to identify key stakeholders in the management and at an operational level, who will need to be "on board", with the concept. There will quite often be very clear two-way contests for the one job remaining after the merger. This will be unpopular with those in the tribe whose candidate misses out. This is the fastest way for the mew post-merger atmosphere to become toxic. Having said that, it makes no sense to put the two businesses together and not achieve any economy.

A clear post-merger landscape and wall chart, is the first step.

Obviously, important details such as equipment, premises, software, procedures and logistics need to be looked at.

An Exit Strategy

Where two or more businesses that are essentially owned and/or driven by one person are brought together, the issues of decision-making , voting rights, and exit strategy, need to be discussed, documented and dealt with.

Voting rights

Which party has how much say on what issues, will be the most contentious of all the issues needing to be resolved. The most obvious to determine is the shareholding of the parties, which should be based upon capital injected (whether by value of the Companies being merged, or other contribution), this will, almost always, determine the voting rights of the parties.

We do see other formulas however, such as:-

(a) Casting votes on particular issues. Particularly where the mergers are complimentary rather than direct competitors, we do sometimes see the Principals hold the casting vote in their area (geographically or by product), so that the other venture party will, in certain circumstances, in that area, defer to the greater expertise of a casting vote holder, in the event of a deadlock.

(b) Voting rights can also be segmented by issue (equipment purchase or new product lines for example), or by financial risk or size of investment.

In each of there identified circumstances, the parties might have to agree unanimously, or special voting rights and casting votes, or rights of veto, might apply.

Exit plan

It would be extraordinary for a full merger to take a place in circumstances where both the Principals are at exactly the same stage of life, with exactly the same exit plans.

If there is a significant disparity between the stage of life of the Principals, then this needs to be resolved.

Regardless of this issue, it is absolutely critical that a trauma event plan, including a Put and Call Option in the event of death or major trauma, with insurance to create funding, be put in place between the parties and be resolved as a condition of completion, during the planning discussions.

Less Permanent Arrangements

It may not be necessary to go to the complete extent of doing a full merger. It may be that a strategic cross-shareholding (exceedingly common culturally between Japanese Companies), or even a simple but clearer co-operative arrangement, will yield more leads and more sales.

There is a certain amount of trust required between the parties, but trust is created and built by clear and open discussions.

Confidentiality

A certain amount of general discussion can be had about "how things might work", but at some stage you are going to reach the point where sensitive information will be exchanged. Again, it is unusual for both parties to be bearing exactly the same amount of risk. There will usually be a range of risks and one party will be more vulnerable than the other. Regardless, the perceived vulnerability is subjective.

A very clear and complete Confidentiality Agreement is essential, if you reach this stage.

Conclusion

Difficult times breed innovative solutions, and businesses that can identify, implement and fully execute new ideas, will often benefit well into the good times that return. Dedicating some time to identify would-be partners and exploring the synergies, is always a worthwhile strategy, but should be treated with care and a structured approach.

Selling your Business- Contract Negotiation Process

2011-10-11T21:06:00.000-07:00

Once you have received a signed offer (hopefully in the format of a signed contract), it is time to look at the terms upon which the buyer wants to take over the business.

This is perhaps the most critical moment of the entire process of selling your business.

An oversight, failure to understand, or miscalculation, at this stage, could either end the process, sending you back to the start, or could sentence you to having to complete the contract, and sell your business, on terms which ruin your future.

It is essential that you:-
1. take the time to read and carefully understand the contract that has been presented to you;
2. engage a competent adviser;
3. decide on your strategy for a response;
4. not be rushed;
5. respond in a way which is most likely to get you to your goal.

The first thing when reading the contract is to check that it is actually completed properly. Is it fully signed? Have all of the variables and blanks been completed? Who is the buyer? Is it a company? If it is a company or a corporate trust, has the director/s guarantee section been completed? Do you have enough guarantors? It is very common these days for a buyer's structure to be set up so that the guarantor provided has no assets, and the spouse has everything. You may want a guarantee from the spouse, despite the fact that she or he is not a director or trustee.

What is the position with purchase price and deposit? Are they somewhere near enough? People often ignore the deposit but it should be sufficient that it is a deterrent to prevent the buyer from walking away at such a critical point.

What is the position with the stock? Is the contract "walk in, walk out" (inclusive of stock)? Or is it a "plus stock contract, with a figure set up as a minimum stock figure, which the purchaser has to buy on top of the purchase price?

If it is "walk in, walk out", although you have an obligation to run the business in its ordinary manner before settlement, it is open to you to run the stock down to a certain degree and take that profit prior to completion. You will still need sufficient stock to operate, but there is no need to maintain a minimum stock level. If the minimum stock level is specified, is it reasonable? Will you have to maintain or increase stock levels leading up to settlement? Will you have "junk stock" leftover which is beyond the stock level specified in the contract, of which you will have to dispose?

What is the position of the staff? This is often highly contentious. The buyer will want to make contact with the key staff members, and ensure that they are remaining, and will want to start to make decisions about which staff to keep and which to jettison. You, on the other hand, will not want the buyer going anywhere near your staff until the contract is completely unconditional. This has to be clarified and managed in the contract.

If your business is particularly sensitive to the loss of key staff, it should be specified that:-
1. the buyer is to have no contact with staff until the contract is unconditional;
2. the contract may be extended for a short period of time for it to become unconditional.

Generally, the last condition to be met is the consent of the landlord. Though it is often the easiest, it is usually done slowly and badly by landlords and their solicitors because it is of no interest to them and there is no consequence for their tardiness.

The contract will be subject to getting this consent (or a new lease).

The buyer does not want to release this condition, and then find out that the landlord will not consent, or wants new, more difficult conditions to apply.

There is therefore a conflict between best outcomes for buyer and sellers.

Employee entitlements

The standard conditions deal with the treatment of employee entitlements, and processes vary from State to State.

Generally speaking, as a matter of technical mechanics, all staff have their employment terminated on the settlement date, and are re-employed (or not) from the first day of new trading.

This poses some problems:-
(a) Wrongful dismissal/ redundancy;
(b) Partially accumulated long service leave.

Wrongful dismissal/ redundancy

You are the seller have the current employment relationship with each staff member. If you terminate that relationship, whether by agreement with the buyer, or otherwise, there is nothing in present workplace law that allows you to do so just simply because you are selling the business. Having said that, there is very rarely any issue with the departure of unwanted employees.

This is not an explicit exception to your present obligation which limits the circumstances in which you could terminate an employment agreement.

The practical circumstance is that this happens every day, and employees accept that on a sale of business that they may no longer be needed.

I have yet to see a wrongful dismissal action brought by somebody whose position is terminated as a result of a business being sold. It is technically open, however.

What is needed is a clear line defining and differentiating your obligations and those of the buyer, particularly if the employee demands reinstatement or a redundancy payment.

It is more technically correct to say that an employee is being made redundant (though it is not in your interests to use this terminology).

The fact is, with the buyer's new proposed roster and structure, the buyer is saying that there is no place for this employee. The question then becomes "what are the employee's entitlements, and who pays them"?

Again, obligations are governed by the individual contract which you signed, and workplace law obligations.

There is a natural obligation, which normally falls upon you, to pay accumulated leave entitlements.

Presently, the practice (as opposed to the legal obligation) is not to pay any other entitlement to a departing employee.

The message is:-
1. read the contract terms and check the impact of these payments on your cashflow and sale proceeds;
2. speak to your adviser about how this works in practice.

Business Sale Contract Negotiation

2011-10-02T23:37:00.000-07:00

This section of the sale process is perhaps the most complex and variable of them all.

Some buyers will want to negotiate verbally, or by exchange of correspondence. Some will start that way and then progress to a written contract, which may be altered and exchanged several times.

By far the best process from the seller's point of view is the production of a signed contract with a deposit cheque attached to the front of it. Nothing indicates that a buyer is serious more clearly than a signed contract.

Your ability to demand a signed contract will depend upon the strength of your position in the negotiations.

It is important to strike a balance when presenting your attitude to the transaction, between appearing needy or even desperate, and at the other end of the spectrum, being so disinterested or difficult that the buyer does not take the transaction seriously.

Nonetheless, it is important to attempt to progress the negotiation on a contract as soon as possible.

Once you have a draft contract you have a clear indication of the issues that are important to the buyer.

Your broker should already have provided the buyer with a clear indication of your preferences and priorities, so far as the variables of the purchase are concerned (Price, stock, timing, staff, equipment, leases etc).

Who draws the Contract?

This is also up for discussion.

Many people believe that money can be saved by making the buyer produce the contract. The benefit is that, sometimes, a little money can be saved in not engaging a lawyer to draft the contract. The downside is that you lose the ability to seize the agenda, and dictate the parameters for the initial negotiations.

Seizing the agenda by having your solicitor prepare the contract costs a little more, but allows you to set boundaries and priorities of the discussion according to your own needs. The buyer will then have to either accept these parameters, or raise an early objection, allowing negotiation on those specific points.

A third option, given that you will be likely paying a significant brokerage fee to the broker, is to have the broker draft the contract, according to your directions. This is one of the few situations where, seemingly, people other than lawyers present themselves as competent to prepare legal documents and provide legal advice.

Drafting of the contract is often presented as "just filling out the form". Particularly with a business contract, it is very far from that.

It is true that the Real Estate Institution (REI) for your state, the real estates agent's union, often produces a "standard" contract which can be used as a template for the sale of a business. It is also true that, so far as it goes, the template is an acceptably good base point for drafting a contract. The REI contract is the most common document used for the sale of a business.

The contract specifies a number of blank variables in an items schedule for special conditions and variations to standard conditions.

Standard conditions can often be a trap for the unwary. Brokers point to these conditions (conscious that they really want a signed contract), and say words to the effect of "oh they're just the standard terms".

Just because they are standard terms, does not mean they are not dangerous, and will need to be looked at and perhaps varied.

One example is that there is often a dispute regarding consent from a landlord to assign the lease. The standard terms make the contract subject to obtaining consent from the landlord to the assignments. Unfortunately, and very surreptitiously, the contract also states that if the buyer commences pre-settlement training and orientation, then that subject to clause is lost.

It is exceptionally common for formal consent to the assignment to be uncompleted in the days before settlement. This leads to a dispute, intense negotiation, and additional cost for both of the parties, at a critical time, when the buyer and sellers are focused on other things, because the standard conditions create a conflict.

The most common situation with contract preparation is that the broker will prepare a draft contract, using the standard local real estate institute contract as a template, according to your directions, and have it available for the buyer to use when the buyer wants to make an offer.

If you intend to proceed on this basis, ensure that this draft is given to your solicitor to check before it is made available to the buyer.

There may well be important legal issues related to your particular business which will force changes to the contract. It is not safe to leave the identification and drafting regarding these issues to the broker.

In many cases, by the times a contract has been in the hands of the buyer, it is quite difficult to insert new issues and variations into the contract.

The Buyer's first offer

The first offer may be verbal, and may even be face-to-face, or conveyed by the broker to you.

Though there is no 'right and wrong' of negotiation, and whilst there is no 'breach of the law' in conducting negotiations verbally, there is significant scope for misunderstanding and dispute in verbal negotiations.

Allowing the buyer to engage in a lengthy verbal negotiation raises the possibility of a later allegation that something said between the parties formed a fundamental term of the deal, the absence of which is fatal to its completion.

The safest practice when negotiating the purchase or sale of a business or property is to, as soon as possible, ask the buyer to put it in writing.

Even a proposal in writing, that is not in the form of a formal signed contract, is a step forward from a verbal negotiation.

Likewise, however, an exchange of emails or correspondence creates some possibility for a dispute.

When does a Contract exist?

It is quite common for parties to fall into dispute, even before a formal signed document headed "Contract of Purchase" is completed.

Quite often, one party or the other will claim that a contract already exists, by virtue of the exchange of correspondence between the parties.

As a matter of law, it is possible for the parties to become committed to a contract without signing a formal contract document.

The law only requires an offer from one party (buyer or seller), acceptance of that offer by the other, and a promise to pay.

If these items are present in a chain of correspondence, then there is an argument that a contract exists.The question then is- does this chain of contract have sufficient details (price, description of the business and items to be sold, completion date etc) to be capable of being interpreted as a contract? The next question is- what do the parties intend and were they ad id ems( of the same mind)?

Usually one party will argue that wither this was simply a chain of negotiations, or alternatively that it was the intention of the parties, once a broad agreement had been reached as to the essential terms, to proceed to a formal contract, and that if anything, the chain of contract was simply an "agreement to agree".

For this reason, a signed contract is far preferable.

What to look for in a Solicitor

2011-09-22T22:41:00.000-07:00

Costs
Costs of conveyancing vary wildly from firm to firm. Be assured that you get what you pay for.

Ask questions about seniority of the people who will be acting on your file and what searches will be done.

Ask whether you will get a copy of the searches and an explanation of the search results.

Ask whether perusal of your mortgage documents from your bank is included in the conveyancing price.

Ask whether unqualified staff or junior staff will be acting on your conveyance.

Ask about the systems and procedures in place to ensure that nothing is missed on your file.

At Bennett Carroll Solicitors, you get more than you pay for. Senior peole, search results explained in an all inclusive price. No junior staff, no unqualified staff and a complete management system to ensure nothing is missed on your file.

Accessibility
Over 70% of complaints to the professional body governing Lawyers relate to inability to get a Lawyer on the phone or to get that Lawyer to return phone calls.

Ask whether the firm has a policy on accessibility and returning telephone calls when you have a question you want answered quickly.

At Bennett Carroll, we answer your questions and your calls.

Provision of information
Ensure that you are happy that you are going to receive up to date informaton as your matter progresses.

Ask if there is a policy regarding copies of correspondence in and out being sent to you.

At Bennett Carroll Solicitors, providing you with information and copies of correspondence is automatic. You do not have to chase us for information.

The comfort factor
Make an assessment when speaking to each law firm whether they have an approach which makes you comfortable. Are you going to be able to work with these people?

At Bennett Carroll Solicitors, we are intent on taking away the stress and working closely with you to ensure complete satisfaction.

A language you can understand
Look at the style of communication used in these initial telephone calls. Do they respond to your questions using your kind of language or is it "Legal Ease"?

At Bennett Carroll Solicitors, we talk commonsence no frill English that you can understand.

BELLIGERENCE VERSUS CO-OPERATION

Ask about their approach to resolving disputes over your matter. Some firms will automatically take a belligerent, aggressive and obstructive attitude. Others, whilst protecting your rights, will work in a co-operative manner to try and ensure that your Contract settles.

At Bennett Carroll Solicitors, we protect your rights and work in a co-operative manner to ensure settlement at all times.

What is the first thing to do when looking at a franchise?

2011-09-22T22:21:00.000-07:00

Research!

Ask lots of questions! You can never ask too many questions of too many people, when making such an enormous decision. Trade shows, internet, franchisors themselves, franchisees, industry groups, Departments of Fair Trading. All these groups can provide information and feedback.

You will probably already have a fair idea, or a short list, of franchise groups that you think will fit you goals and skillset, but any franchisees, once they have settled upon and committed to a franchise, indicate to us that it is very different from their initial intention. Stay focussed on franchises which fit your goals and skillset.

Things to look at:-

1. Length of time established (short may mean that you are in on the ground floor, provided your skillset permits, but long may mean good systems and track records);

2. Location, territory, saleability, costs versus return, reputation, trading history, growth pattern, how that growth has been achieved (organically, through venture capital, or by use of area masters);

3. Your role in the franchise (entrepreneur, manager, technician, sales, accounting or largely hands-off);

4. Recent sales pattern (are established franchisees dropping like flies?)

5. Multiple franchise owners (are there existing franchisees that have multiple territories, are new territories available and, if so, where?)

6. Length of training;

7. Capital equipment requirements;

8. Market forces (is this a sunrise or greenfield industry likely to explode/implode/be subject to Government regulation/be swamped by a battleship competitor?)

9. Is the industry in its adolescence where competition between service providers is rife?

10. Is the industry in its twilight where margins are thin and demand is waning?

11. Is there a big difference between branded franchises and unbranded non-franchise individual traders?

12. Is the franchise brand strong and well known?

13. What is the reputation of the franchise brand?

It is important that you speak to as many people as possible to get their impressions across this range of characteristics. Some franchisees will even ask to work in a branch for a time to get the “warts and all” understanding of the business. Regardless of the amount of homework that you do, ultimately, you will need to be comfortable that the franchise suits you, and that you will be getting value for your franchise fees and royalties.

Common mistakes when buying a franchise:-

1. Lack of homework;

2. Emotional response;

3. Cash register fever;

4. Pride;

5. Failure to engage any/decent advisors;

6. Feeling pressured into finalising a decision;

7. Under-capitalisation;

8. Goals/skillsets mismatch;

9. Poor franchise group;

10. Lack of an exit strategy.

Selling your business- Obligations After Settlement

2011-08-21T16:58:00.000-07:00

Selling your business- Obligations After Settlement

Collection of debts

If your business has trade debtors, that is, people who owe you money, those debts will normally belong to you after settlement, unless the contract specifies otherwise. You may need some assistance from the buyer to complete this process, and you may well find that the debtors wind up paying the new business the old debts, out of habit or ignorance. A certain amount of liaison between the parties will be necessary.

Ownership of the books

Unless the shares in the company which runs the business have been transferred, the practical effect of the sale of the business is that one business has stopped, and simultaneously, another has started.

You will have ongoing obligations as a taxpayer to lodge tax returns, and to justify the content of those returns by reference to source documents (invoices and the like).

Many business owners walk out of their business after sale without keeping a copy of records that might be needed to justify the contents of previous tax returns.

Although a copy of recent records will be required by the buyer to allow ongoing trading, the buyer has no obligation with respect to previous operations. It is recommended that the seller keep the books and records, and provide a copy to the buyer. The buyer may insist upon keeping the current year's records, but you, as the seller, should ensure that you have a complete record, even if the record consists of copies of documents for the most recent trading.

Restraint

These clauses are the most common battleground between buyers and sellers, where the relationship goes sour after completion. It is essential, if you have in mind to continue in the industry in any capacity (whether as owner, manager, employee or consultant), that careful consideration be given to the wording and scope of the restraint clause that is eventually between you and the buyer.

There are several factors to consider:-

1. Your future plans;
2. The effect of those plans on the saleability and value of the business;
3. The cost and duration of any litigation which may arise from a dispute over restraint.

Generally speaking, the law says that unless specifically prevented from competing after settlement, you are free to do so.

Most contracts, however, will contain an obligation on you, after completion, not to engage a business of a similar nature, directly or indirectly, for a particular period within a period geographic area.

Given that, these days, geographical area is becoming increasingly irrelevant, some more current restraints have a specific prohibition upon contact with current staff and with any customer who has recently been in the habit of using the business.

Subtle differences in the wording of these mistakes can make an enormous difference to your entitlement and capabilities, post settlement. Generally, there are several categories of post settlement intentions by sellers:-

1. Complete departure from the industry;
2. Retirement;
3. Part-time work for the business sold;
4. Continued work in the industry, but out of the current area of the business;
5. Continued work in a direct capacity.

It is very important that, at the very least, the restraint agreement be tailored to ensure that you cannot be accused, successfully, of being in breach of that agreement.

List cases

There is a significant body of law (called the "list cases"). dealing with situations where sellers have taken resources from the business to enable them to compete with the business after settlement (usually a client list). If it can be shown that you have taken these resources, this is a very significant step towards a damages judgment against you. You should ensure that such an allegation cannot be made against you.

Attacking the restraint period

The law says that if the restraint period or area is excessive in the circumstances, then there is no restraint at all and you are free to compete.

What is excessive in the circumstances, the Courts have said, "depands upon each individual circumstance". This is rather unhelpful. The Courts have not provided any formula for determining these boundaries.

Broadly, the test seems to be to look at the dynamics of the business, the geographic spread of customers, and the likely length of time necessary for the incoming buyer to cement relationships with each of those customers.

A common argument between the parties arises where the seller indicates that the buyer "approached me". This argument may in fact be available to a seller depending upon the wording of the restraint.

It is important to ensure that this wording (even though the Courts will read the wording restrictively in your favour as the seller), is clear and simple.

When Settlements Go Bad

2011-08-15T23:32:00.000-07:00

When Settlements Go Bad

The mechanics of a settlement of a property or a business contract are quite complex.

Whether buyer or seller, there are some serious obligations to be met, and vital timeframes which must be respected.

Ass to these that each party will have a financier involved, and that financiers cannot be controlled or cajoled, and you have a situation which is dangerous for both parties.

Whether property or business contract, the process is broadly the same:-

Seller's Obligation

Property

The seller has an obligation (unless the contract specifically states otherwise) to provide "vacant possession". That means a property which is empty and no occupancy rights attaching to it.

The sellers also has an obligation to provide "unencumbered title", which means that the title deed is free of any notations, caveats, easements, warrants or mortgages, other than those which are specified in the contract. It is common for an easement to be registered over the property, and this must be disclosed on the contract at the time that it is signed, or the buyer has a right to walk away.

In most cases, this means arranging for your mortgage to be released at settlement. This should be (and used to be) a very simple process taking a short period of time. It is not any longer.

In the past 5-7 years, banks have consistently reduced staffing in the area that manages this work (the securities area), and this has meant that a one page release document, instead of taking 2 or 3 days, can now takes up to 4 weeks to obtain. It is essential that, as soon as you obtain a contract, you alert your bank tot he settlement date and sign whatever internal documents are required (usually called a Release Authority) at your bank to start the process of releasing your mortgage.

The seller is also to obtain readings of the "utilities", that is electricity, gas, telephone and internet. These utilities cannot be "transferred". The practice is that your account will be opened, and the service turned off, and on the same day the buyer's account will be opened, and the service switched on (usually by the same person who switched yours off!) Failure to do this might result in the buyer using your electricity or gas.

Business

In addition to all of the obligation above, the seller has an obligation to obtain consent to the assignment of the lease fron the landlord. The lease will need to be assigned from you to the buyer, and there is often a formal approval process before the landlord accepts the buyer as a suitable tenant. Lanlord's processes range from a formal application with significant documentation, and an interview, all the way down to a short discussion followed by approval. Do not underestimate the time that this might take.

Two documents are required to be prepared to achieve the assignment- a deed of assignement or transfer (depending upon whether or not the lease is registered on the title), which is prepared by the buyer's solicitor; and a deed of covenant, which is prepared by the landlord's solicitor; usually slowly and late. You, as the seller, are responsible for the cost of preparation of the deed of covenant. Some law firms charge significant amounts of money for this, and you should check the approximate cost of the commencement of the process.

The next obligation for the seller is to facilitate a stocktake. Stock is calculated in two different ways, depending on whether the contract is "walk in, walk out" or "price plus stock".

Buyer's obligations

As the buyer, it is your responsibility to provide transfer documents to transfer all of the assets, within a reasonable time before the settlement, so that they can be signed and returned, or presented at settlement.

The transfer of any property will need to be stamped, and stamp duty paid, at or before settlement.

Usually, the buyer's solicitor will seek the return of the signed transfer so that it can be stamped before settlement upon an undertaking not to use it for any purpose until the settlement occurs. If you are not using a solicitor to purchase, you may have a problem with this as the solicitors for the seller are unlikely to accept your undertaking. Formal undertakings given by solicitors disciplinary action or loss of the right to practice. For this reason, a formal undertaking by a solicitor is usually able to be relied upon.

It is essential that you have done everything that is required by your financier to enable the financier to present cheques for the purchase price at settlement. Requirements may vary from lender to lender, and although you should not have to ask "Is there anything else I have to do?", you need to be constantly asking this of your financier or broker to make sure that there are no last minute requirements.

The more obvious requirements are:-

1. Provision of material for a final approval;
2. Signing acceptance of the offer and finance;
3. Signing mortgage documents;
4. Providing certificates of insurance;
5. Making available any balance of purchase price which has not been provided by the bank.

Preparation for settlement

In the days before settlement, the date, time and place of the settlement will be formally booked. The place for settlement is usually at the bank of the seller, which is where any title deed will be. Adjustments to the purchase price (rates, land tax, deposit and other adjustments) will be calculated and agreed, and the seller will provide a cheque breakdown, that is, a list of the cheques required at settlement. Very rarely does the seller receive the entire sale price. There will often be cheques required to be paid to the seller's bank, the local authority, the Office of State Revenue for land tax, and other adjustments.

The matter is then ready for settlement.

Problems at settlement

There are several common problems that occue at or shortly before settlement:-

1. Someone is late or doesn't show up;
2. The seller's financier cannot produce a release of mortgage;
3. The seller's financier will not accept the purchase price in exchange for a release on the mortgage. It does happen sometimes that the total debts of the seller are more than the amount of money which is available at settlement. The seller might have other mortgages and dets, and it is possible that the seller's bank will not accept the amount of money on offer. Usually, this is known in advance and the contract is agreed to by the seller's bank before being signed;
4. There is something wrong with the documents (an error in the transfer or the release of mortgage);
5. There is something wrong with the cheques;
6. One party or another cannot complete their obligations at settlement.

In these circumstances, there are several options available:-

1. Settle anyway-
This is a particularly dangerous option. If this is done, it is often done upon undertakings by the parties. If the party giving the undertaking does not discharge that undertaking, then the party not at fault has a defective title and a major problem requiring Court actio to complete.

2. Postpone settlement-
It is a reasonably common for a settlement to be "stood down", whilst the problem is rectified. Diligent solicitors will ensire that, in the lead up to settlement, their client's rights are reserved to settle at any time on the day of settlement, regardless of what other agreement might be made relating to time and place. This option is always subject to logistical difficulties, as there will often be multiple settlements on for each solicitors firm in each day, and it may not be possible to stand a settlement down. Financiers are also extremely reluctant to move quickly to correct errors, even if the errors are created by the bank itself.

Postponing the settlement to another day has its own problems, chief among which is that, usually removalists wiill have been booked, utilities cut off and put back on, and the logistical arrangements for the change of the property will already be locked in. Occasionally, if there is no other option, the buyer can be allowed a short term occupancy pending settlement, which can be terminated immediately if the settlement does not happen.

3. Tender and mock settlement-
A lot of people (and sadly, some lawyers) think that if a settlement does not occur on a particular day, then the party who was not ready to settle is automatically in breach of contract. This is not so.

A failure to settle, in the absence of a formal settlement at which the innocent party attend and proves readiness, does not create a breach of contract.

In an ordinary contract, a standard clause makes "time of the essence". This means that all deadlines specified in the contract are absolutely defined and vital, and failure to adhere to a deadline creates a loss of rights. In the absence of a formal settlement and tender by the party not at fault, all that happens to the contract is that time ceases to be of the essence. The contract remains on foot but the settlement date becomes no longer vital. It is, in effect, now written in pencil. Either party has the right to issue a "notice to complete", which specifies a new date completion and remakes time of essence. There is no aitomatic breach, and ensure that you have maximum rights, is to have a "mock settlement", and "tender". That is, to proceed with the settlement as originally scheduled, attend, and tender your documents to prove that you were ready, willing and able to settle at the time specified. Once this is done, you can formally place the other side in breach of contract

This does not mean that you to proceed to sue them, but it does preserve all of your rights whilst you are re-negotiating. This process should always be done where there is no acceptable proposal for extending a settlement date.

Franchise groups- What is the sale process?

2011-08-07T18:38:00.000-07:00

What is the sale process?

The process of selling a business goes through several evolutions. After the business has been listed, hopefully, the broker will secure an intedning buyer.

Initial contact with the intending buyer

The broker should be alerting you to any contact with an intended buyer, no matter how intentative. This will allow you to plan. You may actually need to specifically say to the broker that you want to receive a contact in respect of any interested party, no matter how preliminary.

The buyer should receive an 'info pack' which has been prepared by the broker, containing a reasonable amount of information about the business.

If the existence of the listing of your business is in itself sensitive, you should ask the broker to require a confidentiality agreement before the release of any substantive information.

Depending upon the type of business, the initial stage of developing genuine interest for a buyer, may take some time. In some cases however the entire process can take only a week or two. It depends upon the type of business, the purchase price, and the personalities and plans of the parties themselves.

Genuine Interest

At some stage the broker will develop aa buyer to the point where there is genuine interest in buying the business.

At that stage the broker is likely to bring the buyer to the business for an initial discussion.

You need to have given some thought to the mechanics of that meeting. If the existence of a potential buyer for the business will be contentious or unsettling for staff, this meeting may need to be out of hours. Again, in these circumstances, the confidentiality agreement would be in order, prior to this meeting.

Questions asked at those initial meetings vary wildly, but the guiding rules should be:-

1. Provide initial basic information and then answer only the questions which are asked;
2. Be guided by the borker and allow the broker to conduct a meeting and drive the conversation;
3. Be conscious of your intellectual property, trading secrets and client details;
4. Do not reveal details of your key employees at this stage;
5. Treat the initial contact as a 'meet and greet' only;
6. (if the broker does not do so automatically), ask questions about the buyer, designed to find out who they are, to assess how genuine the buyer is, and whether this might simply be a 'fishing exercise' to gather industry information.

Attempt to find out what other businesses the buyer has looked at, the buyer's background, history, capital capabilities, and how far through the process of genuinely committing to a business the buyer actually is.

Ensure that you leave the meeting with a clear understanding of what will happen next, and some idea of the time frames.

The Next Steps

This is where the process varies from time to time.

Some buyers will want to attend a business again and again, and have an endless string of requests for information. It is important that your broker controls this process and that this does not become a distraction for you or the business. If this is the case, at some stage the broker should intervene and ask the buyer to commit to a contract, even if the contract is subject to a formal due diligence process.

Most buyers will attempt to do as much investigation as possible prior to having to committ to a contract. So long as you are not releasing sensitive information, placing the value of the business in danger, or risking unsettling staff, there should be no difficulty in releasing a reasonable about of fetail about the business.

This process however, should be used by your broker to create urgency in the buyer, and to engineer a requirement for the buyer to committ to a contract. After all, the broker's responsibility is (and his commission payment depends upon) securing a buyer who signs and completes a contract.

This entire process should be geared towards driving the buyer to signing the contract, by providing sufficient information to make the buyer comfortable to committ, but not so much information that the buyer feels under no pressure for time. The broker should be able to engineer this, but you need to be aware of the situation, and might be required to direct the broker back to this point.

The Format Offer or Heads of Agreement vs Contract

Occassionally, particularly with larger businesses or sales where not everything is being transferred (where, for example, you are keeping freehold some activities or items are not being transferred), it will be suggested that the buyer will submit a 'formal offer' or that the parties enter into a heads of agreement.

This step is intended to be a preliminary agreement to 'get the parties on paper' so that a more detailed final agreement can be done in due course.

Benefits

1. A heads of agreement can create an initial, low pressure, commitment from a buyer which can be built upon by the broker. It is seen in many cases as an easy way to get some kind of commitment from a buyer.

2. A heads of agreement gets the 'highlights' of the deal on paper, at an early stage, so that it is difficult for the buyer to shift the posts during the process.

Problems

1. The legal position with heads of agreement is unclear and unsatisfactory. The law classes these documents as 'agreements to agree', that is, initial agreements, with an expectation that the parties will continue to negotiate, and that a final agreement, which formally binds the parties will be signed at a later stage. Parties are bound to continue to negotiate 'in good faith', and to sign a document which is, broadly, inaccordance with the heads of agreement. As you can see though, this document has a great deal of lack of clarity and precision. In addition, there can still be a great deal of argument, and negotiation break down, when a formal contract arrives, with respect to parts of the formal contract, which did not appear in the heads of agreement.

2. There is additional cost and delay in preparing and signing a heads of agreement, during which time either an argument may break out, or the buyer may get cold feet.

Occasionally brokers may bring you a 'formal offer', which is essentially a letter saying "I will buy your business on these terms". Whilst this might be worthwhile, and is, again, a low pressure way to obtain some kind of commitment from the buyer, there is no substitute for an offer in the form of a sign contract with a deposit cheque on the front of it. This is, by far, the best, most clear, and most enforceable type of offer.

Selling your business- Methods of sale

2011-08-04T17:25:00.000-07:00

SELLING YOUR BUSINESS- METHEODS OF SALE

Internal sale/management buyout

The people who know your business best, are the people who work there. You might be surprised to learn that a capable and motivated buyer is already under your roof. With a little thought, however, you might be able to find a capable junior, or manager, interested in transitioning into the business, or buying it outright.

For sale by owner

Occasionally, an owner can find a buyer directly.

It is almost always someone else in the industry, or might be a capable manager working for a competitor. The trick is, letting it be known that you are interested, without giving the impression that there is some kind of urgency or problem. Obviously, picking your mark, and being consistent with the words that you use, are important.

Sale by broker

Much of the tim, unless you have a target buyer, you will need to consider appointing a broker to sell the business.

Depending upon the type of business, a specialist broker might be a major step forward.

Specialist brokers tend to have a good bank of contacts and, with their knowledge of your industry, are far more likely to get an accurate and robust price, due to their ability to educate buyers.

A specialist broker for your industry should be reasonably identifiable. If no specialist broker exists or can be found, then choose a broker who is active and enthusiastic.

Business brokers tend to have characteristics similar to real estate agents in that some are incisive, enthusiastic, systematic and get sales completed, whilst some will take your listing, post it on the internet, and hope that someone contacts them.

Choosing a broker

Effective, successful brokers tend to have the following characteristics:-

1. They are easy to find, that is, they are highly visible;

2. They have a well presented website that is easy to navigate.

3. They are easy to get hold of on the telephone, and enthusiastic to have a meeting;

4. They have a standardised presentation, and a formal listing process. At presentation, they exhibit a good knowledge of the induction listing and sale process, and appear to have some knowledge of your industry.

5. They explain the listing process, and the process of contacting them, and a feedback and reporting process for you.

Questions to ask a broker

When appointing a broker, ask the following:-

1. How many listings do you have? (there can be too many and too few)

2. How many listings do you have in my industry?

3. How many sales have you made (this year and this month)?

4. How many sales have you made in my industry (this year and this month)?

5. What is the usual industry multiplier for my industry? (the main valuation tool for business goodwill).

6. How would you go about placing a value on my business?

7. What is the average time between listing and sale for your businesses?

Selling a franchise

Usually, when selling a franchise, it is slightly easier than selling a non-franchise business because:-

1. You get benefit from the brand;

2. The franchisor is constantly generating interest in franchise businessed for new territories, but those buyers will often ask about an existing territory;

3. There is usually a broker that sells the majority of businesses in that franchise, who is reasonably easy to identify.

So long as you take a professional approach to the process, there can be benefits in alerting yout franchisor to your interest in selling. It is important not to give the franchisor the impression that you are desperate or angry as a motivator for doing so.

Your franchisor manager should, in fact, be helping you analyse any problems in the business to identify any improper motivators for selling. It is likely that, in any due diligence period, or shortly thereafter, a buyer will find any major issue that has been hidden, and either terminate the contract, or raise a dispute regarding the particular issue.

These issues should be resolved, or at least a plan for resolution created, prior to the business being sold.

Duties of disclosure- what do i have to tell the buyer?

Unfortunately, there is long and tortured history of business sellers deliberately withholding pivotal information from buyers.

Sadly, the law is not as precise as it could be on this subject.

There is still a general belief in the principal of "buyer beware", that is, it is up to the buyer to ask sufficient questions, obtain sufficient answers, check objectively, and do a proper due diligence prior to committing to buy. The feeling is, that if the buyer does not "do the homework" then it is the buyer's problem.

As a starting point for the law, this is true.

Unfortunately, the matter is a little more complex than that.

Beyond this basic principle, the law imposes some duties to the seller. The duty not to engage in false and misleading conduct, or to makle false representations, is placed over the top of the general "buyer beware" principle.

A seller cannot deliberately provide false information to a buyer.

Often the question arises "What about staying silent?"

As a general principle, silence is not considered misrepresentation.

In rare situation, however, the Courts have found sellers liable in circumstances where a failure to point out a critical issue to a buyer, which the buyer could not possibly have found on an independent search, has been held to be false and misleading conduct, or misrepresentation. This situation is quite rare and isolated.

It is often the case that sellers are aware of impending changes either to competition or to the industry in general, where the seller is unwilling to hold on and fight though that change.

This is not information you are required to volunteer. It is up to the buyer to negotiate a satisfactory price, and look at the information provided and be satisfied that it is safe to commit to buy.

It goes without saying that the information you provide must be accurate, and inaccurate information may leave you liable. Likewise, if you are asked a question during a negotiation, or due diligence, provision of that information must be accurate. It is open to you, of course, to refuse to provide the informationo (unless the purchase contract creates an obligation for you to do so). but the buyer may well draw conclusions from this refusal.

What type of person buys a franchise?

2011-07-26T21:12:00.000-07:00

WHAT TYPE OF PERSON BUYS A FRANCHISE?

Having decided to take on business ownership, there are no set rules, and there is no definitive profile for those that opt for a franchise over ordinary business ownership.

A sound decision, however, should be based on:-

1. Your personal goals (a firm decision that the business will support your lifestyle, not the other way around), a realistic idea of the size of the business (present and future), and an assessment of your skillset;

2. A realistic assessment of the working capital (which will determine the size of the business you can purchase);

3. An objective assessment of your skillset;

4. A realistic decision about the type of work that you personally want to do within the business you are looking for;

5. A realistic view of your technical ability with regard to producing a product or service.

Once this has been done, looking at the gaps and shortcomings, will tell you whether or not you have the skillset to take on all aspects of the business.

If you do not, you will either need to gain that skillset, or buy a business that is big enough to financially support the hiring of those skillsets.

A simpler option may be to look at a franchise system which will provide support, and “plug the gaps”, in your ability to provide a well rounded business operating system.

In effect, your franchise fee, a proportion of your gross turnover, is the price that you pay for receiving this supplementary support.

When considering a franchise, you should also think about whether territorial and other constraints (having to comply with systems, procedures and directions from the franchisor), are going to suit you.

Typical profile of a successful franchisee

People are different. Although psychological profiling is being undertaken by some franchise groups, it is impossible to say, “This is the profile of a future successful franchisee”.

There are some common characteristics, however:-

1. They understand their role within the franchise group;

2. They understand and value the role of the franchisor;

3. They have a good grasp of the dynamics of how the business works, that is, they have an appreciation of the “levers” of the business (stock and staff systems, presentation, sales, advertising, processes), and how each relates to the other;

4. They are clear about their goals;

5. They are realistic about where the business fits into their lives and have a balance between the two.

Profile of an unsuccessful franchisee

Profile A

1. Treats the business as a personal __________ and resents intrusion and direction from the franchisor;

2. Refuses to follow processes;

3. “Knows better”, that is, refuses to accept that there are processes that work in every other franchise, and insists that his/her franchise is “different”;

4. Sees no value (rightly or wrongly) being given for the franchise fees;

5. Does not respect the rights of neighbouring franchisees;

6. Seeks to expand the franchise beyond its existing product range or territory without consultation with the franchisor, or regard for existing rights or responsibilities.

Profile B

1. Isn’t really interested in being part of a franchise in the first place;

2. Simply wants to “learn the system”, and then look for a way out;

3. Doesn’t value the input of the franchisor;

4. Sees no value being provided for the franchise fee paid;

5. Doesn’t respect systems and procedures as intellectual property;

6. Will breach a franchise agreement at any available opportunity.

Either of these profiles are unsuitable to a franchise business.

It is true that some franchisors do not offer value for the fee paid. It is a common complaint that the franchisor “gives nothing and is only interested in fees”. This is, in many cases, a reflection of the franchisee’s subjective assessment of the value received, as often as it is an objective reality.

This comes down to choosing a good franchisor system.

For more information on franchising, and the science and process behind buying a business, see my book “How To Buy A Business” on this website.

Reasons to buy a franchise

2011-07-26T21:10:00.000-07:00

REASONS TO BUY A FRANCHISE

There are almost as many reasons to go into business as there are business owners. Every decision is individual, and not all are “good” reasons. For whatever reason, for centuries, people have felt the need to control their own destiny by buying or starting a business.

So what is so different about a franchise?

Running a business requires a large range of skills, which go well beyond the mere technical ability to produce the product or service which the business sells. Finance, marketing, accounting, human resources, scheduling, managing growth, developing installing and maintaining systems; all these skills are necessary to successfully run a business. An even larger skillset is required to grow a business from its existing size.

That is where franchising can come in.

When you buy a franchise, you should receive the benefit, on an ongoing basis, of a system that is already developed and works.

In exchange for parting with a percentage of a gross turnover, you should be joining a group which already has established systems and procedures to consistently turn out a high quality product which is valued and appreciated by the buying community. You should also receive the benefit of all of the experience that went into making the system successful.

The idea of buying a franchise is that any gaps in your skillset are able to be filled by the collective experience of the franchisor, and the other franchisees.

And the concept works.

You need only look at successful and well run franchises, and speak to the franchisees in them, to see that a franchise structure can be very successful.

The question is – which one?

For more information on franchising, and the science and process behind buying a business, see my book “How To Buy A Business” on this website.

Selling your business Blog 1

2011-07-19T19:11:00.000-07:00

SELLING YOUR BUSINESS

Introduction

Once you have been in business, the decision to get out of it and the decisions that you make after that can have an enormous effect on your future life. Undertaking this process in an organised way at the right time for you, the business, the business cycle, and sometimes the financial year, can make a huge difference to how well you retire, or what capital you have to move into the next business.

There is a large number of variables that need to be considered.

The decision to sell

Making the decision to put the business on the market can sometimes be the hardest part. Yes, we’re all supposed to have entered into business with a plan for exit but the reality is almost no one does. The primary motivator should be a clear plan for a move to something that is, in your view, a better situation.

Most businesses are sold due to desperation, ill health, an unforeseen event or simple business exhaustion. Selling a business in these circumstances:-

(a) narrows the number of people likely to want to buy the business;

(b) encourages bargain hunters;

This is not the bargaining position in which to be.

Planning

As ever, planning and organisation are central issues. You need to have a clear and, I suggest, detailed written plan, or at the very least a list of the issues, and how you intend to deal with them.

Is the business “sale ready”?

To have your business in the best shape to be sold you need to look at the following:-

1. Do I have 36 good months of good net profit?

2. Are my debtors under control?

3. Are my creditors being paid?

4. Is my stock at optimum level?

5. Do I have all my documentation that might be asked for either by a broker or under due diligence?

6. Are my tax records up to date?

7. Do I have employment contracts in place for key staff members?

8. Will the business run without me or will the new owner have to step into an operational role?

9. Are there procedures in place and are they recorded in a manual?

10. If I am reliant upon a small number of key customers, do I/can I have contracts in place for those customers?

11. If I am a franchisee, what is my relationship with the franchisor like?

12. Are my franchise fees up to date?

13. Have my staff undertaken most recent training with the franchisor?

14. What is my equipment like (new, old, leased, rented, paid out, due for renewal)?

15. Do my premises need a fitout update?

16. How long have I got to go on my lease (should I be asking for further options to extend from my landlord)?

Having all or most of these in order will make your business more attractive. Sometimes it’s impossible to have the perfect scorecard but making a list and sorting out as many of these as you can, will help.

Financial performance

The value of your business is a factor of its profit. Every business has goodwill (although in some cases, the goodwill figure may be zero or, in fact, negative).

The goodwill component of the business often makes up a large proportion of the sale price and is the most hotly argued and negotiated portion of the contract price.

The goodwill of the business is based upon the last 36 months of trade. The 12 months average of that trade period will be taken, and then an industry multiplier will be applied. This multiplier depends on the type of business and in each industry it will be different. Not only that, the multiplier changes from time to time within industries due to market forces, the economy, and the amount of demand for businesses in that industry.

The industry multiplier is designed to work out what percentage return a buyer will receive for the capital investment of the business. For example, a business that was quite risky, small, short term or disorganised might be in a situation where a buyer may want as much as 50% return on money invested. In that situation, the industry multiplier would be 2, and the 12 month average of net profit would be multiplied by 2 to give a goodwill figure.

If this were done, a buyer would receive 50% return on the investment.

In a stable, organised business in a well recognised and settled industry (or in a good franchise), the percentage return expected may be significantly lower.

As an example, a 33% return would have an industry multiplier of 3; a 25% return would have an industry multiplier of 4; a 20% return, an industry multiplier of 5, and so on. The better the business, the lower the risk, the lower the percentage return, the higher the multiplier, the higher the goodwill value and the overall sale price.

Add these lower percentage returns with the higher industry multipliers, and the goodwill component could be many times larger, resulting in a much better deal for the seller.

In many cases, however, the sale price at which the business is listed, is determined by:-

1. The amount of money the owner believes it is worth arbitrarily;

2. The amount of money the owner needs to “get out”;

3. Some kind of guess at the “going rate” for some other subjective measure chosen by the owner.

In these circumstances, without any homework or justification to back up the asking price, the business will either be undervalued, or worse, wil languish, unsold on the books of a broker.

Other factors

(a) Plant and Equipment

Any plant and equipment which is owned (as opposed to leased or rented) should also be added to the purchase price. Most times this is done at the “written down value”, that is the depreciated value in the books, but it may be justifiable with certain equipment for you to ask a higher price for the equipment (its replacement value, for example). The seller may not necessarily be unhappy with this, given that the buyer will be able to claim depreciation on the equipment based on that figure.

(b) Debtors

Money owed to the business, called debtors, is not normally sold with the business. It will be up to you to collect that money before or after settlement. You may, in fact, need some assistance from the buyer to do so, and this may need to be written into the contract. If you have key ongoing customers, it may in fact be that the buyer has to collect these funds for you, and some arrangement will need to be made for this.

In some businesses (professional services firms and manufacturing particularly), at settlement there will be jobs for clients that have been started but not completed, or paid for. Time will have been spent on those jobs, which you have paid for in resources, wages and other expenses, for which you have not yet been able to issue an invoice.

If your business is a business of this type, then a formula for you to be paid for work in progress will need to be settled.

(d) Stock

Stock is the most common and contentious of purchase price add-ons. Stock, for the purposes of the contract, is normally valued at its wholesale invoice price (that is, the price that you paid for the stock when you bought it).

There are several ways to deal with stock:-

(i) The walk-in walk-out contract.

This is the shortest, simplest and easiest contract, where the purchase price includes whatever stock is on hand at the day of settlement. The contract will require you as the seller to continue to run the business in its ordinary manner, but there is nothing to prevent you from “running down” the stock in the period before settlement, to a level at which the business can still run effectively, thereby maximising your return. The benefit of a walk-in walk-out contract for the buyer is that it is often cheaper, and is certainly simpler. The risk for the buyer is that there may be very little stock, and the buyer will have to have capital on hand immediately after settlement to replenish stock. This will reflect in the price that you are offered for the business;

(ii) The “plus stock” contract.

Most contracts are for a purchase price “plus stock”. This means just what it says, the stock at the day of settlement, at its wholesale invoice price, must be paid for in addition to the purchase price. The contract should specify a stock level at settlement. The parties will do a stocktake, and the buyer will only be required to take good and saleable stock, of his choosing, up to that price ceiling.

You, as the seller, have the ability to influence that stock level figure, at least as a starting point for the negotiations. Careful preparation of your stock levels during this time will ensure that you are not left with extra stock that the buyer does not want, or be faced with the possibility of selling that additional stock to the buyer at a very cheap rate.

36 months of good profit

If you are in control of the decision to sell your business, that is, it is not being driven by lack of profitability, ill health, or business fatigue, then you have the ability to ensure that you can present financial figures that are as good as you can manage.

There will obviously be a limit to the amount of time that you want to spend on this process, otherwise the business would never be listed and sold. You can, however, take the time to focus on profitability which involves optimising the following variables:-

1. Gross profit (obviously).

2. Limiting expenditure (discretionary spending, private expenses masquerading as business expenses, “little business luxuries”, should all be watched and excluded, if possible, during this period).

3. New equipment purchases. During this period, think about whether there is any benefit to having bright, shiny new equipment, which will damage your cashflow or capital requirements. Counterbalance this with the need to keep your business up to date, and a value judgment about whether old, tired equipment might affect saleability.

FAMILY LAW BLOG - The Divorce Settlement – How does that work?

2011-07-18T15:39:00.002-07:00

Lets first clarify that term ” Divorce Settlement “. To the Lawyers of whom you may be asking questions it’s actually two things!

The term Divorce really only deals with unmarriage. That is a Divorce application is one which seeks to have the Court make a Decree Nisi in dissolution of a particular marriage. That Application does not deal with the welfare of the children (other than in the respect that the Court needs to be able to make a finding that proper arrangements in all the circumstances are made for any children under the age of 18 years before it can grant that Decree Nisi) but the Court won’t on that application for Divorce make any such orders relevant to children or for that matter property. Those issues of How to Parent Children and Property settlement are the subject of entirely separate Applications to the Court.

Most people asking about a Divorce Settlement are actually looking for information about how to divide property.

That’s actually a complex question. It’s made so because there does not exist any prescriptive list of how it’s done for each Family. What we can say is that the Court goes through a four (4) stage process in assessing how a settlement should work.

Firstly the Court (and I mention the Court as it represents our benchmark) will want to assess the content of the property pool that you are looking to divide. I feel compelled to say at this point that less than 3 % of the people all around Australia that go through this process actually need the Court to sort it out. What that means is that of the 55,000 odd applications filed each year in the Court some 97% of them get settled often with the help of the parties Lawyers. Solicitors who work consistently in this field (Family Law) know how this works and although at times it is difficult, we work to guide our client’s toward a settlement that will avoid having to run a full trial in the Court.

The Second step in the process is to value the property Pool so we know what we are dealing with in Money terms. And all sorts of things represent property in the marriage – it includes all the real estate and chattels no matter in who’s name it is held; all the superannuation of both parties; sometimes an inheritance or windfall sum of money particularly if it’s been in the marriage for many years and is now actually represented by assets into which it was invested. That does not mean it is not a relevant contribution for one party or the other but it is most likely part of the asset pool.

Thirdly the contributions of the parties, both financial and non financial, to the acquisition or improvement of that asset pool must be catalogued and considered. For instance it may be that a wife has spent 20 or more years of a marriage as home maker and carer for children rather than as an income generator for the Family. That role of Homemaker and parent is no less valuable in terms of contributions than the efforts of a Father as a provider of income. So that role of homemaker is an example of a non financial contribution.

Finally the Court (and your Lawyers considering what outcome might apply to your case ) must consider what’s called the Section 75(2) factors and these are the intangibles like each parties health, ability to work, develop career and build up a retirement fund etc. So each parties employability and possible income prospects are relevant issues coming out of the marriage. Also the Court must then consider what adjustment in property is just and equitable in all the circumstances.

It’s that last adjustment opportunity that many forget exists and which allows the Court to do what it thinks best with your property! This is important and in the final analysis it’s what gets that 97% of folk to a settlement. Better to settle and be in control of that process than give up the right to make that choice. What you do with a Trial is hand over to a Judge, who did not know you before that Trial day, the right to divide up all your property on a basis that he thinks is fair and reasonable. He may well (and most likely does) have a completely different set of criteria to you when he comes to that task.

So when you come to consider your Divorce Settlement we think that requires some lengthy consideration. You can see from what we’ve set out above that the consideration process will take some time. We actually use up about an Hour and half. We find that our client’s are in a far better position to make informed choices after one of our Fixed Fee consultations. That investment of a few hundred dollars at the front end of the negotiation will usually save thousands at the decision end just because you are well informed on your best and worst possible outcomes.

See our blog on Fixed Fee consultations for more information on how they work.

By Warren John Tegg

FAMILY LAW BLOG - “Family Law Answers – What’s the cost”

2011-07-18T15:39:00.000-07:00

So you are separating or at least feel you should understand your rights if you do?

How do you find out ? Get a lawyer ? You might think that a step too far and you “Don’t want to go to Court”.

In the environment of a dispute at home be it about How you parent the children; property division; how do you keep it together or how you leave safely – knowledge = empowerment.

To make informed decisions on any subject it is vital that we gain some knowledge ; none of us are experts in every field of Endeavour. And in my experience there are a lot of Myths doing the rounds in Family Law.

Here’s a few :-

Fathers have no rights regarding their children !
The Wife gets 70% of the property!
It costs too much to go to court !
I can’t afford a Lawyer!

For more information on the Myths surrounding going to Court see our Blog called “Don’t want to go to Court”.

How do you get this information? We understand that you will find it helpful to have some complete information about :-

The law and the rights and entitlements of all the Parties in the dispute including the grandparents of the children and any other significant carers. Children are the parties with the rights in any dispute about parenting. The Parents have responsibilities. The Children have the right to maintain a relationship with both their parents and any and all extended family who may have become significant in their lives.
The way the system works to resolve disputes regarding both children and property. There is in place a system that requires negotiation prior to Court action, particularly related to children.”No” the police cannot assist one party or the other to get their children (without a specific court order and a Warrant); And “NO “ neither party has the ability to go to Court and get an order that does what they want unless the Court agree’s that order is in the best interests of the children and the Court has heard from all interested parties on the subject. Getting a Court order is just not a unilateral process.
How the Court actually works – what the Courts responsibility is ?

All this information is important on two levels :

It helps you defend your self from frivolous and inaccurate threats ;
Enables you to make choices about what sort of and how much help you might need at this time.

What we do to address all your questions is we run a no obligation initial Fixed Fee consultation which is really a One on One education session just for you. Yes there is a Fee but it’s “Fixed”. There has to be a Fee because we know from our experience the session will take at least an hour and half. We know for instance that as we give you information this will give rise to at least two new questions? I’ll bet you know what the first two questions are right now?

We know each family is different. And that gives rise to special considerations for you. That’s why the session is not done in a group.

We promise you we’ll take the time you need to answer all your questions and fee for that remains fixed. If it’s information you need consider one of our Fixed Fee consultations. Give me a call and we can discuss your particular needs.

Warren Tegg

FAMILY LAW BLOG - “Don’t want to go to Court”

2011-07-18T15:36:00.000-07:00

We manage a community help line here at Bennett Carroll taking calls from distressed people from all walks of life. Over the last Eight (8) years I’ve been dealing with those calls I’ve noted that nearly everyone looking for advice ”Doesn’t want to go to Court” – most people want a negotiated and non confrontational outcome. It is without doubt the single most often made statement I get.

The fact that so many people say it indicates to me that there is a widely held fear of going to court perhaps based in an incorrect notion of what that statement means. BUT I’d like to make a point first :

We do not advocate going to court and neither do most of the practitioners working regularly in Family Law unless that is the only remaining avenue of resolution open to a client. I (Warren Tegg) have been Practicing in Family Law for over 30 years. In all that time a single Family Law statistic has remained pretty constant. That is that over 95% (now 97%) of all Family law matters filed in the Court settle out of Court. Just to fill that out a little it is significant that even if a separating couple has there deal agreed they’ll have to file an application at Court to get the deal sealed and that application is one of the 55,000 odd filed annually around Australia.

What that demonstrates though is that less than 3% of cases actually “Go to Court” that is wind up in a Court room for a Trial. The greater proportion, that is, 97% do in fact settle without the need for that Court room conflict.

This is great news! The reality is that most cases settle and the Lawyers working consistently in this field are practiced at negotiating deals and helping their client’s avoid “Going to court”.

The Court however is sometimes a useful and effective tool in getting to that settlement. What the above statistics tell us is that even though an Application is filed in the Court that does not mean you are “going to Court” in the widely accepted sense.

Each Family is different in their own way and so each Case is somewhat different.

We are negotiators and our initial goal in any matter is to understand your Family dynamic so that we can chart a course to a settlement that suits you.

Check out our information on Fixed fee consulting on your road to understanding how you can resolve your current dispute.

Warren Tegg

Domestic and Child Violence Epidemic

2011-07-17T17:16:00.000-07:00

DOMESTIC AND CHILD VIOLENCE EPIDEMIC

The media is currently filled with horrific stories of violence involving children and families.

There is a whole web of interacting responsibilities and authorities designed to intervene and short circuit these situations. Often they fail, but it does not mean that they are not there.

Police

Police will attend any incident of domestic violence to which they are alerted. It can be a neighbour, a passerby or an occupant. Police will attend as soon as resources permit. The first decision that police officers make when arriving at the scene is "who is the threat?" This is an attempt to diffuse the situation and create a circuit breaker. It is not always the first step to Domestic Violence Orders.

Police will have to make a value judgment as to what intervention, if any, is appropriate. There are times when intervening to remove a party will provoke a violent response from the other against police.

If an intervention decision is made, police have the authority to remove any person from a domestic violence scene, and incarcerate them before they can be brought before a Magistrate.

This does not always improve the situation, but is an instantaneous decision that police have to make when arriving at a scene.

When next a Court can deal with the matter, if police intend to proceed with Domestic Violence Orders, an interim order may be made. It is quite common for a party who was not removed from the scene to be the subject of a cross-application for a Domestic Violence Restraining Order.

The matter will then go through the Court process.

CONTESTING WILLS

2011-04-18T20:29:00.002-07:00

There are three ways to contest a Will:-

1. The Will was not executed properly. Recently, Parliament has lowered the bar on what constitutes an enforceable Will. Previously, there was a very rigid process and very strict requirements for how a Will was to appear, who could sign it, who could witness it, and how these signatures were to be attached. Now, this is somewhat more relaxed and a document merely needs to show “testamentary intention”, that is, the document needs to show that the person who signed it (the testator) intended it to be a set of rules for distributing assets upon death. If this is the case, the Court will often overlook non-compliance with format and execution. Recently, the Queensland Supreme Court approved a suicide note as a Will, despite that fact that it had no witness signatures, and was not in any recognised format. The Court ruled that the suicide note showed testamentary intention, and could be considered a set of directions for distributing assets.

2. Lack of testamentary capacity or, simply, the testator did not have enough “marbles” to understand what he or she was doing when the document was signed. These days, with strong medication and medical treatment prolonging the life (but not necessarily the quality of life) for people, Wills are being signed in circumstances where the mental capacity of the testator can be challenged. Illness, medication and other variables, can all rob someone of the capacity to make rational decisions. The question of whether this impairment is sufficient to prevent someone from understanding the nature and effect of a Will is a difficult and medically based question. Expert evidence from the treating doctor, or other experts, will be required to show that it is likely that the person who signed the Will did not understand its nature and effect.

3. Application for a provision (previously called testator’s family maintenance). This, far more complex process will be covered in another blog.

CAR ACCIDENT – WHAT TO DO/ SAY AT THE SIDE OF THE ROAD?

2011-04-18T20:29:00.000-07:00

1. Move the vehicle out of the traffic.

2. Slow down, take your time, secure the handbrake and put the car in gear.

3. Safely get out of the car.

4. Make an assessment of the attitude of the other driver. If that attitude is aggressive, retreat.

5. Do not, even if the accident is completely your fault, admit liability. In some cases this can void your insurance.

6. Record details of the other driver and any passengers or witnesses – name, address, phone number, registration, make, model, driver’s licence number, name of insurer and motor vehicle owner.

7. Make a note of any statements made, particularly statements referring to liability for the accident. A contemporaneous note made at the roadside or shortly after, is very powerful if there is a dispute later.

8. Report to a doctor if you have even the slightest symptoms of injury or illness.

9. As soon as practicable, sit down and write a summary of what happened.

These actions, taken in a timely manner, can make all the difference to any claim made by or against you.