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| Recent
Business Law Articles |
| "Gift Cards" |
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This month we are going to discuss a very relevant topic in the whole multi-retail arena: gift cards and gift certificates. More and more franchise establishments are using gift cards, and they are becoming increasingly important for specialty shops and restaurants. |
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| “Compensation
Options For Key Employees” |
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Retaining and
rewarding key employees is a challenge for franchise
businesses. As a result of basic retirement
benefit rules (which apply to qualified plans),
many key employees do not receive the full benefits
from traditional 401(k) plans or other qualified
plans. This issue, in large part, is caused
by the large number of hourly workers in many franchise
businesses, turnover and other employment issues
that may make traditional contributor plans unmanageable. |
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| “All Company Valuations Are Not Created Equal ” |
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“What is the value of my company?” is a question I am frequently asked. In the franchisor world (whether it be franchisors or franchisees), we usually focus on a multiple of earnings. In recent times the multiple of earnings have been going up; and there has been a feeding frenzy as it relates to the purchase of franchise companies. |
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| “Accounting
Rules Do Matter" |
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| Providing effective financing ideas
to franchise companies is a goal of this column.
A key element in obtaining financing is strong, clear
and concise financial statements. Recently, certain
accounting issues have surfaced which have an affect
on the multi-unit retail and franchising world. While
these issues have emerged in the public sector, they
do have very important ramifications for the private
sector. |
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| "A
New View For Compensation Planning" |
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| As we all know, compensation is the
number one expense in a franchise business. One of
the trends in compensation, particularly in this
sector, has been to keep base salaries fairly flat
and then implement bonus programs based on performance
and profitability. This trend has resulted in the
proliferation of deferred compensation plans and
other types of incentives, which call for various
deferral arrangements. |
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| "Understanding
Customary Financial Covenants" |
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| Senior debt, subordinated debt and
mezzanine financing agreements generally include
one or more financial covenants to enable the lender
or investor to monitor the financial performance
of the company on a periodic basis. |
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| "Management
Buyout as an Exit Strategy" |
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| Exit strategies, particularly the sale
of a multi-unit restaurant company, at present are
very problematic: (i) multiples are down; (ii) there
are fewer strategic buyers; (iii) the IPO market
is non-existent; (iv) restaurant industry franchisors
are moving more toward franchising than acquisitions;
and (v) private equity groups are not necessarily
willing to pay attractive multiples. |
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