The most recent issue of the Costco Connection has an article about franchising as a great way to grow a business. My initial reaction was surprise that they were so strongly advocating businesses going the route of franchising since it is an incredibly complex and expensive route for a business to take. The article's focus, though, was on how readily available franchise opportunities are to those looking for an "easy" way to jump into business for themselves or grow the business they already have -- not by being a franchisor but by becoming a franchisee. Over the past year or so, I have talked with numerous clients interested in franchising their business concepts as franchisors because they know people are looking for opportunities to jump into a business that has a well-thought out, proven concept that provides them with some flexibility. The article mentions that franchises may start as low as a $10,000 buy in fee, so it is attainable by many people. Beware, though, of opportunities that might pitch themselves as a great "part time" or "flexible hours" deal because owning your own business is NEVER part time... Franchises give you a "turn key" concept and you want to ensure that what you're buying will deliver the necessary operational and financial models, training, and intellectual property to achieve profitabililty.
In any negotiation, it's important to remember what is important to you. It's easy for emotion to overtake the practical and to spend a lot of time and money when it's not getting you to what you want or need. I've been working with a client for over 6 months on a purchase and sale agreement. Negotiations have fallen through and she's learning more about the nature of the other parties to the transaction. In doing so, she has also re-evaluated what would a win look like -- the options are arbitration (which she might very well win) and walking away. Arbitration is time consuming and expensive and even "winning" in arbitration doesn't give her anything that she wants. Similarly, walking away with a deal that is less than optimal doesn't give her much. At some point, you play your cards and walk away despite the emotional letdown of feeling like you got less than what you deserved. Another client contacted me recently asking whether she should pursue small claims court against a vendor who didn't hold up his end of a bargain. Again, what does a "win" look like here -- her losses are difficult to quantify and the vendor may or may not have valid arguments against her claims. She may spend a lot of time and energy on something that may very well not result in much of a financial or emotional win.
I've previously discussed the importance of properly classifying hired persons as employees or independent contractors. FedEx is currently facing a probe from the IRS regarding whether various types of workers were properly classified as contractors. Interestingly enough, FedEx even has an opinion letter from the IRS stating that the workers were appropriately classified as contractors -- we'll see if that's enough. Here's an interesting TaxProf blog posting on point with links to other relevant articles.
The Equal Employment Opportunity Commission this week confirmed that employers may reduce the amount spent on employees who are over 65 and qualify for Medicare. Previously, it was ruled that employers must spend the same amount of money on each employee to avoid the appearance of age-discrimination. This ruling clarifies that so long as all employees are receiving the same benefits offerings, the employer can alleviate costs by having Medicare cover a portion of the benefits expenses.
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