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Franchisee Succession Fumble: Don't Forget the Franchise Agreement

Those of you who are franchisees pay close attention! Have you developed a succession plan for your business? If so, I commend you as many of your peers talk about having a succession plan, but have yet to develop formal documentation that reflects their goals and objectives. Now let me ask you another question. Does your succession plan consider requirements in your franchise agreement such as ownership transfers or successor qualifications? If not, I suggest you shake the dust off of the franchise agreement and find the specific paragraphs that relate to successor nominees, ownership transfers, death, disability etc. Many times the franchise agreement is overlooked or in some cases ignored when franchisees develop their succession plans. This could result in a violation of your franchise agreement possibly resulting in significant consequences such as the derailment of your succession plan!

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How Do I Become an Effective Cross Generational Coach?

There are multiple generations in almost every organizational and business setting. If not at start up, then during transition periods of one kind or another. Older generations don't get younger ones; and younger ones don't get the older ones. Are you puzzled by why it always seems to be that way?

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How To: Jerk Proofing Your Business

Nasty people do more than make others miserable.  They create economic problems for your business.  And the problem is more widespread than most people think.  Especially in some occupations driven by a “sales” or “technical” culture.  So, that’s the bad news.

The good news is that your business  culture doesn’t have to become a hostage to jerks and bullies.  In a recent article (By Invitation:  Building the civilized workplace) appearing in The McKinsey Quarterly, Robert Sutton defined a workplace jerk as someone who leaves others feeling “oppressed, humiliated, de-energized, or belittled.”  

Jerks and bullies attack in any number of ways, whether in business or in family settings.  Some of the more common include insulting and sarcastic humor; turf invasions; status slaps; two faced attacks; verbal and non-verbal threats and intimidation; and public shaming or time-honored hazing disguised at team building (remember the Miami Dolphins scandal?).  Nasty interactions like these are more powerful than a locomotive, spread faster than a speeding bullet, and affect people five times more strongly than positive ones.  

These kinds of behaviors, often condoned because the perp is a great “producer” who brings in a wonderful revenue stream, can destroy an organization or a family in several ways.  Walls go up, morale goes down, customers and applicants stay away, and family members have as little to do with each other as possible.  Steven Covey, author of Principle Centered Leadership, talked about behaviors like these as withdrawals from an emotional bank account.    

So how do you prevent these behaviors from happening?  Our experience suggests that a variety of covenants – family, management, and organizational – help set the tone for building a civilized culture. A couple of well known companies like Gold’s Gym, Southwest Airlines, Success Factors, and Netflix have a “we don’t hire or keep jerks” covenant or policy.  It’s communicated in three ways:  verbally, in writing, and – most importantly – in practice.  If you’re not ready to part company with a jerk, don’t say you will when you know you won’t.  Your failure to do so speaks volumes.

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How to Attract and Retain High Performers for Your Business

  • Do you have key employees who are telling you they want a piece of the action – an ownership interest in the dealership? 
  • Do you have key employees whom you want to retain in the dealership over the long term? 
  • Do you have highly compensated employees who are getting killed income tax-wise and want to know what you can do to help? 
  • Are you looking for ways to create greater incentives for your key employees? 

If you answered yes to any of the above questions, then you should consider utilizing some type of non-qualified deferred compensation plan(s) in your dealership. The Fortune 500 companies have been using NQDC plans for years to attract and retain their key employees and so should you. 

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The Value of Pre-Marital Agreements

Building a healthy, strong, and long-lasting marriage requires a lot of hard work. Good marriages don’t happen by default, they require intentionality and equality of contribution and effort by both spouses. Unfortunately, even the best of relationships endure many significant challenges. As one marriage psychologist said, “Marriage is really, really, really, really, really hard work for about the first 20 to 25 years…and then, it starts to get kind of good.” This may be an overly negative statement, but it reflects the reality that establishing the foundation of a long-lasting, healthy, and fulfilling marriage is not easy.

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Business Structuring and How it Can Impact Long-Term Goals

Business structuring deals with the mechanical aspect of how your business operates. The structure of your business has a direct impact upon items such as business taxation, control of business ownership, gift and estate tax on business transfers, and shareholder access to cash flow. As a business owner, it is critical that you or an experienced advisor understands the details relating to corporate structures and agreements between directors, owners, and key managers as they have a significant influence upon your business’ success and longevity.

 

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50/50 Partnership Not Working Anymore - How to Resolve While Still Maintaining a Working Relationship

Partnerships are curious animals.  Two or more people start off with a great idea; decide there’s some synergistic benefits in working together; shake hands; and start off with the very best of intentions.  And then everyone lives happily ever after.  

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Are You In Constant Conflict With Your Partners - When To Know You May Need Help!

When I first met my wife, Patricia, I was head over heels in love. We came from similar backgrounds, had countless common interests, and our relationship was storybook magic. However, just a few years after our honeymoon, our marriage appeared to be less than ideal. With the advent of children and the increased time demands of work, no longer was my yin totally harmonizing with my wife’s yang. After significant soul searching we recognized that marriage is not a natural state; we also decided that we wanted to be married and that we were willing to work at being married. So we found a counselor to help us understand and deal with the good and bad that we brought to our union. Now, after 30+ years of counseling we have a marriage that isn't perfect but one that is getting better every day.  

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Why Employee Contracts Are So Important to the Succession Planning Process

Business Structuring is a critical factor of the interdependent Succession Matrix®. Business Structuring impacts the nine other factors of the Succession Matrix® and accordingly, those other nine factors positively or negatively impact Business Structuring. For more information on all ten factors, refer to the International Succession Planning Association website at www.ISPAssociation.org.  

Business Structuring actually consists of two sub-factors, Business Organization and Business Documentation. Business Organization refers to the actual structure of the business as a corporation, LLC, partnership, etc. and its alignment to the strategic goals the business has for the continuation of success through the next generation of owners and managers. Business Documentation, as the name implies, refers to the actual documentation that formalizes the business organization as well as agreements regarding the disposition of ownership, leases of equipment and real estate, and contracts with vendors (franchisers, distributors, lenders) and employees. With respect to employment contracts, I am often asked what role an employment contract has in business succession planning. In light of the volume of curiosity, let’s embrace this subject.

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Don't Overlook the Employment Contract - How It Can Impact Your Exit Strategy, Cash Flow and Protection from the IRS

As a dedicated business succession planner, I am often bringing up the subject of employment contracts. The predictable initial response is “I hate contracts and what role could an employment contract have in my business succession planning?” This question generally comes from someone who has 80% of his/her net worth tied up directly or indirectly in their business and does not have a prayer of retiring without concerns about their financial security. They are plagued with the concerns of “Where am I going to get income?” and “How will I replace my current benefit package?”  Fortunately, the employment contract can be a very valuable tool in relieving these concerns and facilitating business succession planning.

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Don't Overlook the Employment Contract - How It Can Lock In Your Competitive Edge

In addition to employment contracts being beneficial for business owners, they also can play a very important succession role with key managers. Business owners commonly have concerns that key managers, critical to the continuation of the business’ success, could be recruited away by a competitor. There is also concern that the key managers could become frustrated with their perception of the succession plan and jump ship after the owner’s retirement rather than give the successors a chance to earn respect.  And the nightmare of nightmares is that with access to customer lists, processes and technology, a key manager could hook up with a competitor and inflict devastating damage on the business. These concerns about the commitment of key managers commonly impede exit strategy, successor identification and preparation, the transfer of management responsibility and the transfer of stock.

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The Successor Coaching Cycle - Key Steps for Developing Your Successor

There are as many coaches running around today as you can imagine. There are performance coaches, life coaches, business coaches, parenting coaches, relationship coaches, and on and on. Some of them are qualified to do what they do, some will be in the future, and some will be doing something else in the future. 

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Long Term Care and a Living Trust

As I discussed in my previous post, “Business Succession and Long Term Care,” the financial independence component of business succession planning has become more complicated with the growing concern about long term care. However, with the accumulation of wealth, there is reduced concern regarding the availability of resources to pay for long term care, if appropriately addressed.

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What You Should Know About Long Term Care Insurance

Per my previous posts on this subject, “Business Succession and Long Term Care,” and “Long Term Care and a Living Trust,” I hope you understand and agree that the financial independence component of business succession planning should address Long Term Care contingencies.

Long term care is not a simple matter even if you have the resources to provide for whatever level of care you desire. Due to the medical circumstances associated with the need for long term care you will need an objective advocate who you believe would have your best interest at heart who may not be your children because as your children may be preoccupied, from the dark side, or you may not have any children. 

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Why Family Governance Should Not be Overlooked

In my first post on this issue I said that the reason for exploring family dynamics is precisely because family issues compel business decisions. I just got off an hour long phone conversation with a client regarding generational attitude differences between her generation and the 3rd generation family member employees. The mental health issue that has brought this to the forefront is that one of the G3 family members just admitted himself, at the urging of other family members, into a drug rehab facility.

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Make Sure What You Have Is What You Need - The Importance of Reviewing Your Planning

You may have heard the saying “the only thing that remains the same is change,” and that is especially true when it comes to planning for the future of your business.  My partners and I are constantly reminding clients that change will be a constant in their succession planning environment especially as it relates to their feelings, finances, family and federal tax laws. As these changes occur, reviewing and updating various aspects of your planning is imperative. While at times this can appear to be inconvenient, it will ensure you maintain proper alignment and ultimately increase the probability your succession plan will succeed.

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The 10 Commandments for Integrating Family Member Employees Into Your Business

The Biblical assertion” to whom much is given, much is required” certainly applies to family member employees. Although the doorway to a career may be open and inviting, the pathway of family member employees has many challenges. No doubt, earning respect is a formidable task. As previously discussed, many of these challenges are good as they separate the pretenders from contenders. However, family member employees do not need handicaps. There is no reason to add unnecessary frustration, stress and humiliation to the inherently bumpy road that they must endure to achieve the training and experience needed to become a successor.  

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