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Kenneth Paul Milner

Kenneth Milner’s Answers

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  • I have an LLC that I have not used but now wish to change activity from Real Estate to a franchise. How do I do this?

    Had the LLC since 2007.

    Kenneth’s Answer

    The answer to your question should be found in your LLC's Operating Agreement. First, check the "Purpose" provision in it. Hopefully, it is a broad provision (e.g., "The Company has been formed primarily for the purpose of real estate investment and related operations, but the Company can engage in all activities permitted under applicable law"). If so, the next step would be to check the Operating Agreement to find out how decisions are made and implemented.
    In Pennsylvania, there are two types of LLCs: Member-Managed, and Manager-Managed. If you are a Member-Managed LLC, the members will have to vote. Again, the Agreement will set forth what percentage of member voting interest will be needed to change the focus of the Company. If the Company is Manager-Managed, then the Manager can simply make the decision. Finally, the Operating Agreement will have a provision which sets forth whether there has to be notice, whether there has to be a meeting, and other procedural aspects.
    I recommend that you consult with an attorney to make certain that your review is complete, and that you and your company do everything necessary to comply with Agreement provisions, and the implementation of the procedures. Of course, if the Company does not have an Operating Agreemnt, I urge you to retain counsel at once.
    --Ken Milner

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