Huntley Legal's Blog

When buying business assets, it’s wise to start informal enquiries in the early stages, before you instruct a solicitor. Why? Because it helps uncover the extent to which you need to expand these investigations when the purchase reaches a more formal level. In the worst-case scenario, it can also reveal whether it is worth pursuing the purchase further.

Here are some of the due diligence checks you can start to look at even before your solicitor gets involved.

Last time, we wrote about the four main structures you can use when setting up a Joint Venture (JV). One of the most popular is a contractual JV agreement. Remember, this is when you don't set up a new company; rather, you and your business partner agree how you will work together as two separate companies.

Most commercial matters might seem patently obvious, but it's important that everything is articulated nicely, neatly and clearly. Here are some of the issues to cover at the outset of your JV agreement:

A Joint Venture (JV) is when two or more people or companies want to work together with a view to making a profit from their commercial activities.

When setting up a JV, there are various structures you can use. This article explains the four that are conventionally used in the UK, so you can choose the one that suits you best.

Starting your own business is high risk. It's daring to invest money in an untested venture, and the failure rate is high. Running your own franchise can be a tempting alternative. However, I am constantly surprised by the number of people who sign up for a franchise without doing any due diligence or taking advice on the franchise agreement.

When you're a director or shareholder, there are various occasions when you might be asked to become a personal guarantor. For example:

• A new startup that's applying for its first bank account, loan, or equipment lease arrangement
   
• An established business to support bank borrowing, equipment financing, or premises lease

I've also seen people who've been asked to become a guarantor when taking shares or joining a new company at a senior level. When it's not your own startup or run by family or friends – you should treat this as a red flag.

This article lists 8 key things to consider about personal guarantees...

Share buybacks are a very popular way of handling the exit of a shareholder, because they prevent the shares being sold to an unwanted or unknown person or company. They are also used when a shareholder wants to sell part of their holding or release some built-up excess funds in a company.

However, there are a whole heap of rules to follow if the share buyback is to be legitimate. This is to prevent shareholders from using buybacks as a way to strip assets from the company, so leaving creditors with nothing to collect. You must therefore plan and implement any share buyback carefully.

This article explains some of the key rules that apply to buying back shares, what to do beforehand, and how the buyback should go ahead.

Franchising is on the rise. It’s certainly bigger now than it was 20 years ago.  According to a NatWest survey of the British Franchise Association, it increased 46% during the decade up to 2016.

If your business is moderately successful and you’re ready to expand your reach, franchising could be an attractive option.

If I set up Marie’s Burger Bars (unlikely!), I’d probably be able to run the first two or three outlets myself. Once they were successful, I’d open other outlets to be run by franchisees. They would have to look like part of my operation, and any differences would be indistinguishable to customers.

Before you decide whether franchising is right for you, there are a number of issues to consider.

The plant and equipment you need to make your business work can be expensive, so it's not always feasible to buy it outright.

You might be a startup company with no assets, find that you're unable to secure a bank loan, or not have sufficient cashflow in place.

A hire purchase agreement means you can get your hands on the equipment you need, right now.

With HP, you pay an initial deposit, then pay the balance in instalments over the term of the agreement. When you pay the final amount, you own the equipment at last.

But that advantage comes at a price. Here are 5 points to note before you sign:

Some of us are old enough to remember when a data processor was a machine, not a person.

Today, a 'data processor' is the person who holds and processes data on behalf of a 'data controller'.

• The data processor does not have any responsibility or control over the data
• The data controller decides the purpose of processing the data, and the process to be followed

Statutory obligations used fall solely on the data controller. Under the new GDPR legislation, there are a bunch of obligations that fall on data processors too.

Most of the GDPR articles I've seen (and written) focus on the obligations and responsibilities of the data controller. But the data processor has their own obligations and risks.

Depending on your activities, failure to comply can lead to fines or administrative measures imposed by the ICO or their European counterparts. It's a serious business. Fines can be up to €20 million or 4% of worldwide turnover. If things get really bad, you can also face a lawsuit from a data subject.

This article looks at the Data Protection Act 2018 (as it is now called since it's passed the bill stage) from the perspective of a data processor.

Never mind GDPR; unsolicited marketing via phone and text message can also lead to trouble under the Privacy and Electronic Communications Directive regulations 2003.

It's a serious matter, with fines of up to £0.5 million and the possibility of being disqualified as a director.

The public are still being plagued by unsolicited electronic calls. We've all taken a call that starts with a moment of silence before a robot or a real person talks to you!

However, despite fines being levied, a high proportion of them remain unpaid.

So the government wants to give the law more teeth.