Welcome to DeBrieF …
Well, what a couple of months it’s been; from some shock local election results to some disappointing news about the economy. However, we are firmly focussed on the future and all of our efforts are going on making sure we carry on delivering for our clients across the firm.
So, in this issue of DeBrieF, we hear from Martin Gee who is the head of our Glossop office about his vision for the business and his team, we also get an overview of buying a franchise from Andy McNish in our coprporate department plus there’s some news about our new Collaborative Law Service which has just launched. And, not forgetting, there’s our usual round up of events as well as several other interesting articles.
Kate Oldfield – managing partner, Davis Blank Furniss.
Davis Blank Furniss Launches Collaborative Law Service
When a family of any shape or size splits up, the upheaval and resulting legal process can be traumatic for everyone. It can often become very acrimonious which leads to more pain and heartache – especially if children are involved. However, there is another option which is why we have launched our new Collaborative Law service. This brand new offering – which is headed up by Anita Shepherd – enables families who breakdown to conduct their affairs in a dignified and respectful manner with the aim of avoiding going to Court.
For more information, click here
Andy McNish – who is a partner in our corporate department, looks at buying a franchise…
With redundancies at a high, many people are looking at what self-employed options are open to them and one of the most popular ways to set up a business is by operating a franchise. However, it can be a difficult process, with the first question being ‘what exactly is a franchise’? Well, a franchise agreement allows a person or a company (‘the franchisee’) to trade under the name of another (‘the franchisor’) and most franchise systems operate on a territory basis that are often delineated by postcodes. The most famous franchise business is ‘McDonalds’.One of the key advantages of having a franchise is that a franchisee can take advantage of the franchisor’s national advertising, purchasing power, name, reputation and training. That means set up costs can be lower and less capital and effort are needed to be put into promoting the business and establishing supply chains.If you are concerned about your business or management skills – or are wishing to enter an area in which you are inexperienced – then a franchise will allow you to build skills in a low risk environment. Statistic show that established franchises have a lower risk of failure than other types of businesses. As expected, these advantages come at a cost as franchisees will be expected to pay royalties and can use only the franchisor’s nominated suppliers who themselves will often be paying a commission. There may also be additional fees such as the licensing of any mandatory IT software or contributions to the advertising budget. These can all add up and significantly increase running costs which ultimately reduces profit margins.There is also less flexibility, as franchisors will provide strict guidelines as to how the franchise should be run. Some business owners may find this level of control to be frustrating and restrictive, but any deviation from the criteria set out potentially puts you in breach of the franchise agreement. This could mean that the franchisor could take away the franchise without paying any compensation. When it comes to buying a franchise there are a couple of avenues; you can either take a fresh franchise, which is usually for a new territory, or you can purchase an up and running business from a current franchisee. If you go for the first option, then time and effort will have to be put in by you into building up the business. This should be the lower cost option but it will also be higher risk as you won’t have any actual turnover or profit figures to look at when you are deciding whether to go ahead. If you buy a tried and tested outlet then you will incur higher costs as you will have to pay for the franchise and negotiate a sale agreement with the seller. A purchase of an existing franchise will also need approval of the franchisor.
Sale documents will need to be agreed several days in advance of any target completion date to allow time for the franchisor’s approval. In any event, a new set of the franchise documents – and a new lease if the franchisor is also to be your landlord – will need to be signed.
The franchisor will also often charge fees both to the incoming franchisee (standard set–up costs) and the outgoing one which is based on a % of the sale price – this is usually around 5%. They will also pass on all of their legal costs. Seller’s should also note that that the courts routinely uphold restrictions on an ex-franchisee’s ability to start-up or work in competing businesses for at least a year following sale.
If you think you might be interested in either buying or selling a franchise (or in setting up a franchise network for your existing business) then contact Andy –
DeBrieF Under the Skin of… Martyn Gee, senior partner at Davis Blank Furniss in Glossop
What is your role at Davis Blank Furniss?
I’m the senior partner at the Glossop office.
How long have you been at the firm?
I’m proud to say that I am one of the firm’s longest standing employees as I’ve been here for over 30 years – I joined as a trainee in 1979. The business has, of course, evolved hugely in that time so it’s been a great honour to be part of it.
What are your specialist areas?
I act in a several key areas of Law; mostly notably residential property, property & developments as well as wills, trusts, probate and care of the elderly.
Why did you choose a career in law?
My father worked in industry all his life and although he enjoyed his work, he always felt vulnerable to changes in the company over which he had no control. He was therefore eager to ensure that my brother and I went into the professions. My brother became an accountant as he liked figures and I became a solicitor as I enjoyed reading research and meeting people!
How do you see the legal sector changing over the next few years?
Lots of different providers of legal services are now starting to appear in the market place so we will have to see how well they fit into the existing system. The evolution in technology has also changed – and will continue to change – the way a solicitors’ office operates. Many clients now choose to communicate via email and that can mean less personal contact but as a firm, we are all still committed to providing a truly personal service. Instructing a lawyer shouldn’t just be a simple business transaction as we deal with people’s lives.
What are your personal goals for your department?
Simple – to continue to provide a personal service to the people of Glossop.
Outside of work, how do you like to spend your time?
I try to travel with the family as much as possible. We love exploring every single inch of Italy and enjoying La Dolce Vita.
Do you have a motto that guides your professional and personal lives?
You don’t have to have the last word to win an argument and never let small issues become big problems!
Our View: Sonio Singh, partner in our corporate department discusses how GPs can be more entrepreneurial with the advent of The Health & Social Care Reform Bill
The controversial bill to reform the NHS giving GPs responsibility for the commissioning of services and abolishing Primary Care Trusts recently received royal assent to become The Health and Social Care Act 2012. The Bill has caused a lot of debate but at its core, GPs and Clinicians will be given far more responsibility for spending the NHS Budget in England whilst greater competition between the public and private sector will be actively encouraged. There will now be a structure of National Boards, four Regional Hubs, 50 local officers of the Board and over 200 clinical commissioning groups under the Secretary of State for Health. Responsibility for controlling spending will transfer from the existing Primary Care Trust to Clinical Commissioning Groups.
The Reform Bill has raised lengthy debate regarding ethical issues, windfalls for GPs and conflicts of interest. Conversely, there are various entrepreneurial opportunities for GPs to consider. Click read more to get a flavour of the matters at issue:
- Private Healthcare Firms – Whilst adhering to ethical standards at all times, GPs who previously formed private healthcare firms may benefit from the revamped NHS. Given the opportunities that are available, GPs will require detailed advice regarding the structure of such provider firms (whether these are partnerships, limited liability partnerships or corporate entities). Accordingly, partnership agreements and shareholders agreements are needed to ensure there are specific rules relating to (inter alia) profits, costs, information flows and retirement/exit policies. Without a robust corporate governance document, any contracts of the legal entity may be at risk resulting in the failure of that practice. Conversely, the growth in private healthcare firms of GPs may lead to interest from private equity firms looking for opportunities. It is evident that the legal position of the GPs will therefore need to be protected.
- Clinical Commissioning Groups – It is clear that GPs will need to be leaner and stronger both as commissioners and providers of legal services. A substantial authorisation and establishment process complying with statutory guidance will need to be satisfied. The commissioning consortia themselves will need to be a type of legal entity in order to enter into binding contracts. The relevant options primarily include the alternatives of a partnership, limited company or limited liability partnership. Whilst there is no substantial guidance as to which bodies are preferred, undoubtedly tax and legal considerations will determine the choice. Primarily, a GP will want to ensure that he/she is not personally liable to the consortia.
- TUPE concerns – Another issue remains the employment of staff by a GP practice and a relevant consortium. The Secretary of State may order staff transfers from PCTs to consortia or personnel of the existing GP practice may be utilised in a number of areas. It is evident that there must be clarity as to who is the employer and, should the consortia need PCT staff, whether the application of the Transfer of Undertakings (Protection of Employment) 2006 provisions apply.
- Ethics/Directors Duties – Regarding the expenditure of consortia, the NHS Commissioning Board will be contributing towards these costs. It does appear that over performing consortia will receive additional payments thus providing them with an obvious financial incentive. This may in turn invoke disclosure/conflict of interest and directors duty issues pursuant to the Companies Act 2006.
As The Health and Social Care Act 2012 unfolds, a number of opportunities – in a wide range of areas – will continue to arise. The above summary provides some relevant examples for GPs but it’s going to be a complex ride so our advice is to seek professional support and guidance as soon as possible.
If any of these issue are relevant to you then please do drop Sonio a line to firstname.lastname@example.org
Buying & Selling a Business (in association with EN and Pierce)