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Kenneth Paul Milner

Kenneth Milner’s Answers

2 total

  • Undue stress, control and harassment of Franchisor - what are my options?

    The Franchisor is seeking to expand the Franchise Agreement terms to impose new duties, controls, restrictions and reinterpret to manipulate existing covenants. Extreme Dictation, forceful intimidation and harassing emails threatening possible vio...

    Kenneth’s Answer

    (As is often the case) I agree with Matt that you should consult with an experienced franchise attorney, and provide to that attorney the franchise agreement (and related documents) and SBA loan documents for review. The attorney will be able to tell if there is indeed an "expansion" of the terms of the franchise agreement, or is requiring something which would trigger a breach of your loan documents.
    It appears that you and your business are located in Pennsylvania. Pennsylvania does not have a franchise relationship law. (Though one has again been introduced by a legislator, there is a likelihood that it will not move forward for some time, if at all.) Accordingly, your rights and obligations will probably be defined under contract and general business laws principles.
    Though it is hard to tell from the limited amount of information in your inquiry, there is a good chance that a franchise attorney will recommend a step-by-step approach: Believe it or not, a lot can be accomplished by having your counsel and the franchisor's counsel address the matter. If that fails to bring about a resolution of the problem, then you may look toward trying to sell the business (to the franchisor or someone else), a mutual agreement of termination, mediation, arbitration or litigation.
    One factor which has not been mentioned is whether there is a franchisee association or franchise advisory council. Another factor which should be explored is whether other franchisees are experiencing the same problem. Your previous relationship with the franchisor is also a factor which counsel should take into consideration. Of course, counsel will have to take into consideration your current financial situation and your feelings as to whether you would want to remain in the franchised system if the matter is resolved.
    Ken Milner

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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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