If you’re like many Florida business owners, you may view retirement with both excitement and misgivings. Even as you look forward to having more time to enjoy favorite activities, the idea of moving on from your livelihood can be anxiety-inducing. One option that allows you to step away and still experience the benefits of retirement is bringing family into the picture. The formal requirements under the Florida Business Corporation Act aren’t too complicated, but there’s a bigger picture to consider when you transfer business ownership to a family member. As soon as you begin seriously thinking about retiring, time is of the essence to start planning. You’re in a better position to leave on your own terms, maintain control over the process, and reap the benefits of a steady retirement income. You should discuss the specifics with an experienced Florida business law attorney, especially three key topics that may guide your decision making. Your Company’s Value There are numerous factors to consider about your own retirement situation, but you may also have concerns about your company’s well-being and longevity in moving forward without you. For many closely held companies, there’s significant value attached to the people that built them. When your own unique, personal input is an asset to the business, you need to assess the extent to which the company can survive after you sell it – or whether it can maintain a good proportion of its value by transferring business ownership to a family member. The analysis starts with an unofficial business valuation, typically a basic review of assets, expenses, accounts receivable, and debts, along with the value of your personal reputation and good will. Then, you’d determine whether the total dollar figure could be enough for a comfortable retirement, exclusive of other savings, pensions, and investment income. If you’re convinced that your business would perform well without you at the helm, you need to work out an official business valuation through generally accepted accounting standards. Not only is this necessary for making a decision on transfer or sale, but also for the tax implications in evaluating your expected retirement income. Your Individual Retirement Needs Retirement is a major life transition for anyone, and even more so for someone who owns a business. When considering your own needs for income, you must assess how far your retirement will go for a wide range of expenses, such as: Your basic needs, including your mortgage, utilities Health insurance and medical costs; Car leases; Services you’re used to gaining through the company, such as tax preparation, and club memberships; and, Other expenses that you’ll now be responsible for covering yourself. You must also consider how to apportion your retirement income to cover these costs, especially the amount that comes from transferring your business as compared to your income from investments and other assets. For this reason, as early on as possible in your planning, you should be contributing to a retirement fund that will suit your needs – aside from what you’d make through a sale of your business or transfer to a family member. Keep in mind that you could make arrangements to stay on and play a role with your company when you transfer ownership to a close relative. Many former business owners can serve on the board of directors or in a consultative role, enabling them to make an income without taking full control of operations. You can make an important contribution if you’re serving and maintaining relationships with customers who have been dealing with you directly for years. Options for Structuring the Transfer If you’re leaning toward transferring ownership of your business to family members or trusted employees – as opposed to a third party – there are multiple options and structures to consider. You should discuss the specific pros and cons with a business law attorney, but you might look into: Gift Transfer: You could transfer ownership to the other party as a gift, with the caveat that you’ll earn income form the new owners. As of 2017, the Internal Revenue Code allows you to claim an individual gift exemption of $10 million – or $20 million if you execute the deal with a spouse. Because the laws allow for annual adjustments for inflation, the exemption is $11.4 million and $22.8 million for 2019, respectively. The amounts increase for the next few years. This means you could leverage the business transfer as a gift without adverse tax implications, in some cases. Once the business is no longer part of your estate upon your death, you won’t incur tax liability when the company expands Financed Sale: You may opt to act as a lender in transferring the business to a family member, and there are many ways to structure the transaction. Through a promissory note, you can obtain payments directly from the buyer based upon an amortized schedule – or installment payments followed by a balloon. During the pendency of the arrangement, you’ll make a steady, regular income to maintain a comfortable retirement lifestyle. Partial Sale & Lease Back: If your company has considerable holdings in real estate, a building, or other property, you could sell the business – but retain ownership over these assets. Then, you can rent them back to your family members as new owners of the company. There are tax advantages, but the key benefit is that you can fund your retirement through the lease payments. Keep in mind that you need to include specific provisions when drafting the documents to transfer your business, as disputes can arise when family members are caught off-guard by a lease relationship. “Succession planning, particularly where it involves transferring ownership or operation of a business to children or other family members, must start with the question: ‘What is the best interest of each party?’ Sometimes its easier to jump ahead to talking about available structures before having complete understanding and agreement on the goals.” BrewerLong Attorney Trevor Brewer Contact an Orlando, FL Business Law Attorney for Help…
If you’re new to commercial leasing, you’re probably quite amazed by the highly technical, meticulous nature of the contract. Leases for these spaces are very different from residential agreements, especially since landlords may require you to pay an amount in addition to your actual rent. This payment often covers taxes, maintenance, and insurance (TMI). When you find out that you’re obligated to pay, it could have a significant effect on whether the space is affordable. A Florida contract attorney can explain the details, but it’s helpful to review some answers to frequently asked questions about TMI in a commercial lease. What’s included in TMI? In most cases, the bulk of your TMI will go toward your landlord’s property taxes and some insurance costs. Beyond these amounts, you might think of TMI as including many of the same maintenance costs that you’d pay as a homeowner in an HOA. Examples include: Landscaping, waste removal, and cleaning of common areas; Paying for building management costs; Administrative fees; and, Ongoing repairs and maintenance for the roof, HVAC, plumbing, and related costs. “The division of maintenance obligations is one of the most significant items requiring negotiation and attention to specifics.” BrewerLong Attorney Ashley V. Brewer In addition, Florida imposes sales tax on leases of commercial property, so some of these amounts are also built-in to TMI. Why is TMI separate from the base rent? It’s a common practice for landlords to present their monthly rent in terms of a price per square foot, so tenants like you can compare different spaces. Companies separate out TMI in leases because the tenants are the actually using the property and taking advantage of the features that additional rent supports financially – usually in the form of more customer traffic due to the enhanced appearance of the space. How does the landlord calculate TMI? Usually, your landlord will add up the total costs for annual taxes, insurance, and maintenance, and then divide it by the total square feet of the building. From there, the company multiplies the per square price by the number of square feet in your individual space. The total is the amount of TMI that you’ll be responsible for paying, though the formula may vary depending on your circumstances. Does TMI fluctuate over time? Because property taxes make up a good proportion of the total TMI amount, you can expect your additional rent payments to increase or decrease. As key systems age, including the roof, HVAC, and plumbing, the costs may also fluctuate. Can I negotiate TMI? It can be challenging for a prospective tenant to negotiate changes to TMI. Landlords know that their tenants talk, and they don’t want to create conflict by offering one business a lower TMI as compared to others. Discuss Commercial Leases with an Orlando, FL Contract Lawyer If you have additional questions about TMI in a commercial lease, please contact BrewerLong. Our team advises business owners through Central Florida, including Orlando, Sanford, and Winter Park. We can schedule a free consultation to provide more information on commercial leasing issues.
When you’re buying or selling a business, some of your main considerations will be price, the structure of the transactions, complying with transfer regulations established by the Florida Division of Corporations, and related details. One key issue that may not cross your mind is an exclusivity period. This prohibits a seller from dealing with any other potential buyers while the transaction is still pending. To determine whether you’d want one, you should understand what exclusivity means, learn about the key clauses, and consult with a Florida business law attorney about the pros and cons. Overview of Exclusivity Clauses in Business Transactions An exclusivity provision defines a length of time, typically 1-2 months, where a seller cannot deal with any party other than the prospective buyer regarding the sale of the business. Exclusivity covers a wide range of activities involving a transaction, including: Advertising the business as being for sale; Entertaining an offer made by another party; Entering into negotiations regarding the sale of the business; or, Accepting an offer. The specific terms, including the duration and itemized list of prohibited activities, will be included in the exclusivity section of the letter of intent executed by the buyer and seller. Purpose of an Exclusivity Period These provisions are essential to protect both buyer and seller in a transaction involving sale of a business. In generally, the transaction doesn’t proceed in the same fashion as the purchase of a home or car. There are formalities, due diligence periods, and other tasks that cannot be accomplished overnight. That means exclusivity periods offer advantages to both parties to the transaction. Buyer Benefits: As a potential buyer, you need time to go through the books of the target business and conduct your own assessment of whether the deal is fair. Reviewing the essential information takes time, and you don’t want to feel rushed. Seller Benefits: If you’re on the other side of the transaction, you don’t want to go through the effort and time in selling your business – only to have the buyer proceed lackadaisically or dwell on minute details. After all, even though you have a letter of intent, you don’t have a complete agreement. If the buyer ultimately backs out, you’ll have to start the entire process from scratch, which could affect your business value and bottom line. For this reason, sellers have power to negotiate a reasonable amount of time for the exclusivity period. “A carefully drafted exclusivity provision—as part of a purchase offer, Term Sheet, or Letter of Intent—is key to the negotiation process. It gives the parties time and space to work out the details of a transaction, and even decide whether a transaction can happen, without either party risking terrible consequences.” BrewerLong Attorney Trevor Brewer Key Provisions in an Exclusivity Agreement Though they’re usually part of a larger document as the letter of intent, there are several key clauses that comprise the exclusivity arrangement between a buyer and seller. Some of the more important provisions include: No Shop Provisions: The crux of an exclusivity agreement is the seller’s promise to not solicit, negotiate, or enter into agreements regarding alternative transactions with other prospective buyers. It’s also possible to include the requirement that the seller end any existing sale discussions with third parties. Exclusivity Period: The start and end dates are the key details for this section of the agreement. Usually, the period begins when the buyer has a meaningful indication of interest, often by signing a letter of intent. However, there are other documents that can contain exclusivity clauses, such as a term sheet or offer for sale. The end of the exclusivity is typically marked by both parties’ signatures on an acquisition contract or bill of sale. Obviously, a buyer will want a longer period to address due diligence, but a seller may want to negotiate a shorter duration – such as 1-3 weeks. Termination: Both parties should give themselves an “out” in case the transaction doesn’t measure up to expectations. As the buyer, you may uncover issues that affect the sale price or intentions for the business. The seller could negotiate terms that terminate the exclusivity period if the buyer isn’t making progress toward completing the transaction. Duty of Good Faith: Any purchase agreement should require parties to act in good faith throughout the exclusivity period. A failure to include such terms – or refusal to sign – demonstrates that either the buyer or seller isn’t committed to completing the deal. Consult with an Orlando, FL Business Law Attorney About Exclusivity Issues For more information on how exclusivity periods work in the sale or purchase of a business, please contact BrewerLong. You can set up a free appointment by calling 407.660.2964 or visiting us online. Our team serves business clients in Orlando, Sanford, and throughout Central Florida, and we’re happy to advise you on the key legal issues.
Whatever the reason behind your decision to dissolve your business, it’s important to understand that it’s not as easy as just closing your business doors and moving on. There are multiple requirements under the Florida Business Corporation Act, and noncompliance can lead to serious legal consequences. Though many business owners were fully prepared to start up their company, fewer know exactly how to dissolve a corporation in Florida. The details will vary depending on the nature and where your organization stands within a typical corporate lifecycle, so it’s wise to trust a Florida business law attorney for assistance. A general overview of the steps can also help you learn what to expect. Determine Dissolution Requirements If you never issued shares to stakeholders and haven’t launched operations, your plan for terminating your business is relatively straightforward. You need to complete the necessary forms to dissolve. The paperwork is available online, but you can’t submit your documents through the Division of Corporations website. Instead, you might have to type your information into the relevant fields, and then print everything out and send it through US mail. For corporations that have issued shares and accepted funds or other items of value for an ownership interest, the requirements are different. Notify Stakeholders If people have invested in your company by purchasing shares of stock, they are owners. You couldn’t sell or otherwise cease operations without their consent, so you’ll need to notify them that you intend to dissolve your corporation. Your Articles of Incorporation and Bylaws contain the details on how to call a meeting for purposes of terminating your company, so you’ll need to strictly comply with these rules. During the meeting, members of your board of directors need to officially bring up the issue of dissolution for a vote and recommend it to the shareholders. Then, you must get consent from a majority of the shareholders to dissolve. In some situations involving small businesses, members of the board of directors will also be shareholders. That could make the process easier; however, it’s possible that not all stakeholders agree. Alternatively, there may be many shareholders in a larger company, further complicated the process. “Corporate dissolution should not be seen as the first resort in solving disputes among business owners, managers, and investors. The ideal situation is for parties to engage in a negotiated settlement of their difference, so that the corporation can continue to survive.” BrewerLong Attorney Michael Long Fill Out Dissolution Forms Once you have agreement from all shareholders, you’re ready to fill out the necessary paperwork to wrap up your business. The form is Articles of Dissolution and, though it may seem easy, you need to fully understand the details. You must include: The full, legal corporate name of your company as registered with the Division of Corporations; The date that you originally filed your Articles of Incorporation; The date that you intend for your corporation’s dissolution to officially become effective, which must be within the next 90 days after filing; and, Some details on how your company voted to dissolve, which would typically be a corporate resolution. If you didn’t initiate operations and never issued shares, you must supply the name and relevant dates as mentioned above. In addition, you must include an attestation, i.e., a sworn statement that: You have not issued any shares; Your company didn’t conduct any business; Your corporation has no outstanding debts or legal obligations; and, Members of the board of directors or the original incorporators agreed to dissolution. Complete a Notice of Dissolution Though not mandatory to dissolve your company, you may opt to prepare this notice. The document officially states that your business has ceased, which can be useful in dealing with any debts or legal obligations. If creditors contact you seeking payment, you can use this form to establish the requirements necessary to make their claims and get payment. The document also acts as official notice that creditors cannot bring any new claims for debts you’ve resolved. Submit Materials Along with Fees The final step in how to dissolve a corporation in Florida is sending everything into the Division of Corporations. You should include a cover letter that itemizes everything that you’re including in the packet. It’s also necessary to provide a check, along with all necessary fees – which will vary depending on the method of dissolution. Get Legal Help from an Orlando, FL Business Law Attorney At BrewerLong, our lawyers have decades of combined experience advising business clients throughout Central Florida. We can explain how to dissolve a corporation in Florida, and we’re prepared to help you navigate the process. To schedule a free consultation with a member of our team, please call 407.660.2964 or fill out an online contact form.
If you’ve been in the business world for some time, you’re probably familiar with the different types of entities that you can form through the Florida Division of Corporations. Limited Liability Companies (LLC) have become popular in recent years because they allow you to protect your individual interests and can be structured to optimize tax treatment. Certain individuals holding a professional license or other credentials through the state may be interested in a specific type of entity, the Professional Limited Liability Company (PLLC). There are very specific rules regarding a Florida PLLC. You should trust a Florida business law attorney regarding the specifics, but some answers to common questions may be helpful. What is a PLLC? This type of business is similar to an LLC in the sense that there are members who own and run the business. However, a PLLC must be organized and operated by individuals who hold a proper Florida license in the associated profession. For instance, only the following individuals can be members of a PLLC: Physicians, dentists, and other medical specialties; Certified public accountants; Attorneys; Certain types of architects and engineers; and, Others designated by law. Beyond this requirement, there are other similarities between a PLLC and LLC. All members can play a role in day-to-day operations, decision making, and other management tasks. They can also share in the profits and losses, without the constraints of forming a corporation. “PLLCs are somewhat unique to the State of Florida. BrewerLong is a PLLC, because it best reflects that this is a company that is owned and operated by licensed attorneys.” Trevor Brewer Are there any restrictions on “limited” liability? The attraction of limited liability entities, including corporations, LLCs, and PLLCs, is that you can insulate your personal interests from debts and obligations of the company. Creditors cannot touch your own assets for debts owed by the PLLC and claimants cannot reach your property due to misconduct by other members. Still, “limited” doesn’t mean complete elimination of liability. You cannot protect your own assets from: Liabilities related to your own professional misconduct; and, Personal guarantees you’ve executed on behalf of the PLLC for loans or other financing. What are some of the legal requirements for a Florida PLLC? Beyond being a licensed professional, there are some basic compliance issues. You must file the proper paperwork to organize your company, and it needs to bear a name that includes some derivation of “PLLC” in the title. Plus: Your PLLC cannot be involved in any conduct other than the services that you’re professionally licensed to provide. There’s an exception for investments that are directly related to business operations. ALL members must hold a license in the relevant profession. Business managers, investors, “silent” members, and others cannot have an ownership interest unless they also hold the proper credentials through the State of Florida. Current stakeholders cannot transfer their ownership interest to any person who doesn’t have a license to practice in the professional services offered by the PLLC. Do I need to prepare an Operating Agreement for a PLLC in Florida? An operating agreement is essentially a blueprint for your business, defining the organizational rules, distribution of profits and losses, structure for decision making, and many other issues. You’re not required to execute an operating agreement when forming a PLLC, but there are many advantages. Generally, preparing one is a benefit because it reduces the likelihood of disputes and disruptions in company operations. How do I deal with taxes and insurance? For tax purposes, a PLLC is a “pass-through” company, which means that tax liability goes to the individual members instead of the entity itself. Stakeholders report income and losses on their own tax returns, much like an S-corporation. The PLLC does file an informational return with the IRS, but there’s no tax liability for the entity. All individual members of a PLLC should carry individual professional insurance policies to cover their own losses in the event of malpractice. The company and other members aren’t liable for such misconduct, as described above. With a proper insurance policy and coverage in place, you’re protected against claims stemming from your professional services. Discuss PLLCs with a Knowledgeable Orlando, FL Business Law Attorney After reviewing the above, you may have additional questions about PLLCs in Florida. Our team at Brewer Long Business Law can provide the answers you seek, so please call 407.660.2964 or visit us online to schedule a free consultation. We can provide more detail after reviewing the nature of your business. Our office represents clients throughout the Orlando area and Central Florida in a wide range of business law matters, including business entities and formation.
The basic definition of a divestiture is selling off business interests and assets, and closing down the enterprise upon conclusion of the process. However, there’s a lot more you need to understand if you’re considering this type of transaction or its counterpart – an acquisition. The Florida Business Corporation Act covers the scenario generally, but there are complicated financial, legal, and organizational considerations that you won’t find in the statute. These issues may affect your interests before, during, and after the transaction is complete, so it’s smart to retain a Florida mergers and acquisitions attorney from the start. You can become familiar with some of the basic principles about acquisitions and divestitures by reviewing some important information. Key Definitions To expand upon the basic terminology, a divestiture is a complete disposition of a business entity’s presence, assets, liabilities, debts, and other interests. The transaction may be through selling the business, but divestiture can also occur because of an exchange of real estate, company property, and stock. If the organization qualifies under the US Bankruptcy Code, the court may also approve of a divestment through liquidation or restructuring proceedings. Depending on the background, it’s possible to complete either a full or partial disposition. For instance, a company may consider divestiture where: Trademarks, copyright, or patents have expired; It’s selling intellectual property to another organization; Separate divisions of the company are acquired through different mergers and/or acquisitions; A court orders divestiture to cover a judgment or other legal liabilities; and, Under many other circumstances. Reasons a Divestiture May Work for Your Needs Business owners have multiple grounds for wanting to divest their interests in a piece of property, a component of the organization, or the entire enterprise. You may want to consider divestment as an option if you’re seeking to: Eliminate redundancies in your business, where a unit isn’t turning a reasonable profit; Increase cash flow for the company without incurring loans or bringing in new investors; Make your business look better on paper, especially where you’re looking to sell and increase the fair market value; or, Avoid adverse consequences of bankruptcy or terminating the company. In addition, divestiture may not be an option when it’s the subject of a court order or a finding by an administrative agency. “Instead of starting a new business from scratch, sometimes the best decision is to purchase an existing business. With the right structure, a buyer can purchase the seller’s whole business or just the parts that are attractive to the buyer.” Trevor Brewer Relationship Between Acquisitions and Divestitures For every business that’s looking to optimize operations through divestment, there’s another company actively seeking out opportunities to advance their interests. For this reason, divestitures are often closely associated with acquisitions by another entity. However, based upon the reasons above, extra caution is essential if you’re on the acquiring side. Regardless of whether your interests are in acquisition or divestiture, a thorough business valuation is essential. There are multiple approaches, including those that take into account fair market value, historical value, income, asset value, and initial purchase prices. You should trust legal counsel and financial experts to advise you on the right structure, but options include: A partial sale of units, a subsidiary, or other interests; Spinning off and dividing up various business units into a separate company; Splitting the company up into multiple, separate entities – which divests the parent company and operations cease; or, An approach that involves selling a subsidiary or business division and offering it up through an IPO. Speak to an Orlando, FL Mergers and Acquisitions Attorney for Free If you’d like more information about acquisitions and divestitures in Florida, please contact Brewer Long Business Law to set up a no-cost consultation. You can reach our Maitland, FL office by calling 407.660.2964 orvisiting our firm website. Our experienced lawyers handle complex business transactions for clients throughout Central Florida, including Orlando, Deltona, Apopka, and Lake Buena Vista.
If you’re seeking to buy or sell an existing business entity in Florida, there’s a good chance you want to accomplish this goal through either a merger or acquisition. The route you take depends upon a number of factors, and one of the most important is what’s best for your needs and those of your company. Though the Florida Business Corporation Act’s section on merger goes into great detail on the legal requirements, it doesn’t offer any guidance that’s useful for your specific situation. Because of the complicated issues involved with these transactions, it’s wise to rely on a Florida mergers and acquisitions attorney for assistance throughout the process. You might also find it useful to review six important things to know about small business mergers and acquisitions. “I tell my clients to focus on the end results they want to see in a business transaction. It’s my job to figure out the best transaction structure to accomplish my client’s goals.” Trevor Brewer 1. Mergers and acquisitions are different structures: A merger integrates two companies into a single, new business entity, combining the assets, liabilities, and some executives and personnel of each entity. Though there are creative ways to structure the transaction, a true merger is rare because of the challenges faced by separate organizations that want to become one. In an acquisition, a target company is absorbed by the entity that’s purchasing it, usually through a stock or asset acquisition. 2. You must determine the right structure for your needs: Based upon the differences between the two, you can see how you’ll need to make the right choice between a merger and an acquisition – regardless of whether you’re the target or the acquiring organization. If you want to continue operations alongside another business, you’d opt for a merger. When an acquisition makes more sense, you must then determine whether a stock purchase, asset acquisition, or blend of the two would be appropriate. 3. A business valuation is essential: Financial considerations are a key motivation when considering a merger or acquisition, so you’ll need to arrange for a business valuation to determine what the other company is worth. A CPA or other business appraisal professional may take different approaches in conducting such an assessment, so you should agree in advance on the basis you want to use. 4. There are certain requirements for the Merger or Acquisition Agreement: There are some mandates addressed by law, while others are just smart to include when you’re involved in a merger or acquisition transaction. Obvious issues include the purchase price and how it will be paid. However, some additional key points you should include are: The business valuation method, as described above; How debts, contracts, and liabilities are distributed; Employment issues involving current employees and executives; What happens to intellectual property; Tax matters; Representations and warranties regarding the business; Insurance; Liens and third-party contracts; and, Much more, depending on your circumstances. 5. You may need to obtain multiple approvals: Regardless of what form the transaction takes, you must at least review the possibility that you’ll need approvals for a merger or acquisition. For instance: Stockholders may need to consent to any arrangement that affects their holdings. In some situations, you may be required to obtain approvals for every shareholder in accordance with their ownership interests. For some transactions, you’ll need to get approvals from the Board of Directors. In the case of third-party contracts, including agreements involving key employees, you must assess the documents to determine how the merger or acquisition could be an issue. 6. There are certain tasks involved with transferring business ownership Once you complete a merger or acquisition, you must file the appropriate documents in the State of Florida. You’ll also need to review any changes regarding tax issues with the IRS. Other administrative tasks include changing the taxpayer ID number for business bank accounts, changing title and ownership on company assets. Any insurance policies should be adjusted to include the name of the entity that results from the transaction, and you must check to ensure all business licenses reflect the new arrangement. Consult with a Mergers and Acquisitions Lawyer in Orlando, FL Today Of course, there are many additional matters you need to know about small business mergers and acquisitions in Florida, so it’s important to work with skilled legal counsel from the earliest stages. You can trust our attorneys at Brewer Long Business Law to explain the relevant legal issues and protect your interests from start to finish in this type of transaction. To learn more, please call 407.660.2964 or go online to schedule a free consultation. Our team serves business clients throughout Central Florida and the Orlando area out of our Maitland, FL office.
As more business owners strive to protect their interests and investment in intellectual property, Florida nondisclosure agreements are becoming more common in the corporate world. Computer programs, code, trade secrets, customer information, and related assets have value, so it’s important to keep them out of the hands of your competitors. However, state law on restraints of trade does include some important requirements to ensure these agreements are enforceable. A Florida contract attorney can describe how the statute works, but you can read on for some general information about nondisclosure agreements. Overview of Nondisclosure Agreements Also known as a confidentiality agreement in Florida, a nondisclosure agreement is a contract between two or more parties that prohibits the release of information. These clauses come in two forms: Unilateral: Only one of the parties is required to keep the information confidential, often in the context of an employee-employer relationship. Mutual: All parties are prohibited from making disclosures, which may be useful between multiple business partners, vendors, and related parties. There’s a wide range of information that can be subject to confidentiality agreements, including: Company research and development data; Software and computer programs; Marketing strategies; Trademarks, patents, and product prototypes; Customer and client details; and, Many other forms of intellectual property. Special Considerations on Florida Confidentiality Agreements A nondisclosure clause is considered a restraint on free trade, so there are some ramifications that are different from other types of contracts. You need to keep in mind that: By law, a nondisclosure contract must be reasonable and necessary for protecting a legitimate business interest. It must also be limited in scope and duration, in terms of timing, geography, and other relevant factors. While not required, you should put any confidentiality agreement in writing. When you have a physical document, you can establish the fairness of the arrangement, along with other key terms and conditions. A written nondisclosure is also effective in clarifying what information is to be kept confidential. Using a blanket statement instead of specific definitions may increase the likelihood that an agreement will not be enforceable, as described below. Your confidentiality agreement must be supported by consideration, an essential element of any contract. The term refers to the exchange of something of value, which might be getting hired in the employment context. Alternatively, when signing a nondisclosure agreement is part of an employee’s exit strategy, the item of value could be a severance package. Enforcing Florida Nondisclosure Agreements As a business owner, you know that the implications for a breach of a confidentiality clause can devastate your company. Your competitors, associated businesses, and a disgruntled employee can destroy what you’ve tried diligently to protect. Fortunately, you do have options under Florida law. A Lawsuit for Monetary Damages: Because it’s rooted in contract law, you can sue for breach if someone violates a nondisclosure agreement. You can seek compensation for all losses resulting from the violation of the contract, to the extent that they can be ascertained by solid evidence. An Action for Equitable Relief:In many cases involved a breach of confidentiality, it’s possible to sue in equity, where you request that the court take certain actions instead of awarding monetary damages. You can ask a judge to issue a protective order enjoining the offending party from continuing with the offensive conduct. Keep in mind that your success with legal action depends, in part, on how well you’ve structured the nondisclosure agreement at issue. It must comply with all legal requirements, especially the reasonableness standard and issues regarding your legitimate business interests. A court may refuse to enforce a clause that’s not in strict compliance and only serves to limit the other party, instead of providing protection to your company. Other Types of Restrictive Covenants As you’re considering nondisclosure agreements, there are some other related contracts you may want to review. For example, you may choose to implement such restrictive covenants as: Nonsolicitation agreement, which prohibits current and former employees from steering away your existing workers, clients, and customers into a related business opportunity; and, Noncompete agreements, a way to prevent departing employees from working for a competitor or opening up their own shop for a designated amount of time after their exit. “It’s important for folks to understand that Non-Disclosure Agreements are incredibly useful, but they have limits. They’re not the same as non-competition agreements, for instance. Just because a person agrees that he or she will not disclosure your valuable business idea, that might not mean the he or she won’t use the idea himself of herself.” Michael Long Talk to an Orlando, FL Contract Lawyer About Your Options As you can see, restrictive covenants are more complicated than some of the contracts you may deal with on a regular basis. For more information on nondisclosure agreements in Florida, please contact Brewer Long Business Law to set up a no-cost consultation. You can reach our office by calling 407.660.2964 or filling out our online contact form. Our experienced contract attorneys represent business clients throughout Central Florida, including Orlando, Sanford, and Winter Park. We can explain the relevant legal issues in more detail after reviewing your situation.
A trade secret is a form of intellectual property. As the name implies, it is ‘secret’ information that gives a business a competitive advantage. Trade secrets can come in a wide range of different forms. Some of the most common examples include formulas, practices, designs, patterns, processes, commercial methods, and any combination of the above. Trade secrets are protected under both state and federal law, including the Florida Uniform Trade Secrets Act (Florida Statutes § 688.001) and the federal Defend Trade Secrets Act (DTSA). In this article, our Orlando intellectual property attorneys explain the most important things that you need to know about trade secret misappropriation claims in Florida. What is a Trade Secret? A trade secret is a confidential device, technique, or strategy that a business uses, in some manner, to obtain a commercial benefit. To qualify for trade secret protection under state and federal regulations, information must be truly secret, it must offer a tangible competitive advantage, and the trade secret holder must take reasonable steps to protect their confidential information. If any of those criteria are not met, then legal protection may not apply. More specifically, the three key elements of a trade secret are: Actual Secrecy: Information that is already known or that is readily discoverable by competitors is, by definition, not a trade secret. Actual secrecy is required. Economic Value: You cannot obtain trade secret protection for just any information. In order to qualify for protection, the information must have actual commercial value to the company. If no competitive advantage is offered, then it is not a trade secret. Active Protection: Finally, Florida companies must be making active efforts to protect their trade secrets. If a company fails to try to secure information, then it may lose its ability to seek trade secret protection. What Remedies are Available in a Trade Secret Misappropriation Claim? There are a number of different remedies that may be available through a trade secret misappropriation claim. At BrewerLong, our Orlando trade secret misappropriation attorneys are strong, effective advocates for our clients. We are committed to helping companies protect their sensitive and confidential information and, when trade secret misappropriation does occur, recover the maximum available compensation for any damages. Depending on the specific nature of the trade secret misappropriation, the following remedies may be available: Injunctive Relief: Injunctive relief (an injunction) is a court order compelling a party to refrain from a specific action or, alternatively, to take a specific action. In the context of trade secret misappropriation, injunctive relief can sometimes be used to stop continued misappropriation and to preserve the secrecy of the sensitive information. It is one of the most important tools in a trade secret misappropriation lawsuit. Actual Damages: State and federal courts have the authority to award plaintiffs financial compensation for their actual economic damages. These damages can come in a wide range of different forms, from a company’s direct financial losses to the illicit profits that they were denied. Calculating damages in a trade secret misappropriation is notoriously challenging. Companies should be represented by an experienced Florida IP lawyer who can help them recover the full and fair financial damages that they rightfully deserve. Attorneys’ Fees/Legal Costs: In some cases, courts may award victims of trade secret misappropriation attorneys’ fees or court costs. Though, this is not required under the law. Generally speaking, Florida courts typically only award in this remedy when the defendant is determined to have acted willfully or maliciously in violating the plaintiff’s intellectual property rights. Punitive Damages: Finally, in some limited cases, courts may award punitive damages. As described by the Cornell Legal Information Institute, punitive damages are meant to punish the wrongful actions of the defendant. Generally, punitive damages will only be awarded if the defendant is deemed to have acted in bad faith or if they made significant profits because of the trade secret misappropriation. Four Tips Florida Companies Protect their Trade Secrets 1. Know What Needs to Be Protected As a starting point, Florida companies seeking to protect their trade secrets need to know exactly what they have to protect. As was mentioned, state and federal regulations require companies to take proactive measures to keep their trade secrets confidential. Failure to do so could potentially prevent a company from pursuing a trade secret misappropriation claim. 2. Use Written Agreements With Employees and Contractors If employees, independent contractors, or other outside parties have access to trade secrets, the companies should require them to sign a written agreement. Among other things, the agreement should include a strict confidentiality or nondisclosure agreement. In the unfortunate event that trade secret misappropriation does occur, a well-drafted agreement will make it far easier to take legal action. 3. Limit Access Whenever Possible Ideally, companies can avoid dealing with issues of trade secret misappropriation altogether. One of the keys to protecting trade secrets is to limit unnecessary access to sensitive, confidential information. If an employee does not actually need to know the trade secret to perform their job, then they probably should not be given access to it at all. The fewer people that have access to trade secrets, the better. 4. Take Immediate Action to Address Violations If you believe that trade secret misappropriation has occurred, it is imperative that you take immediate action to protect your rights. When trade secret misappropriation is allowed to linger, a company may eventually lose its right to take action. Beyond that, the sensitive information may be shared with an ever expanding number of parties. The bottom line: Contact an experienced Orlando, FL intellectual property lawyer right away. Speak to an Orlando, FL Trade Secret Misappropriation Attorney Today At BrewerLong, our top-rated Florida intellectual property lawyers have deep experience handling the full range of trade secret misappropriation claims. If your company is considering filing a claim for trade secret misappropriation or if you are facing a lawsuit for alleged trade secret misappropriation, we are available to help. 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When work is performed or services are provided by an outside party, it is often done under a vendor services agreement. Business owners and individuals in need of services from a third party— whether as a one-time thing or on an ongoing basis — should use a vendor services agreement. With a clear and professionally drafted vendor services agreement in place, your company can dramatically reduce the risk of conflict or confusion. In this article, our top-rated Orlando, FL contract lawyers explain the most important things that you need to include in your vendor agreement for services. The Key Provisions in a Vendor Services Agreement There is tremendous value to having a properly crafted vendor services agreement. Similar to other commercial contracts, a vendor services agreement will control much of the relationship between a company and its outside contractor(s). Not only will a clear and well-constructed vendor services agreement reduce the risk of a dispute, but it will also protect the legal rights and financial interests of your company. A good vendor services agreement should be comprehensive — it should address a wide range of different issues. Some of the key provisions that should be included within a vendor agreement for services include: A Description of Services: First and foremost, a vendor services agreement should provide a clear overview of the nature and scope of the services that are to be offered under the contract. In some cases, a statement of work will be included with the agreement. The more detailed description of the services is, the better — as it is crucial that all parties understand their duties. The Terms for Payment: Certainly, an effective vendor services agreement should have a clear explanation of the terms for payment. Among other things, the contract should address how much will be paid, when it will be paid, and how it will be paid. Often, the vendor is paid partially upfront and partially upon completion of the agreement. Term of the Agreement: How long will the vendor services agreement last? Make sure that you clearly define the term of the relationship. Whether your company is hiring a vendor for a single event or to provide ongoing services, it is essential that the term of the contract is understood by all parties. Limitation of Liability: Many vendor services agreements contain a limited liability clause or an indemnification clause. If you are entering into a vendor services agreement in Central Florida, be sure to carefully review the liability provisions. A lawyer can help you understand if the limitations on liability are fair, reasonable, and in your best interests. Restrictive Covenants: Depending on the nature of your relationship with the vendor, you may be interested in seeking a restrictive covenant. A common example of this is a non-compete agreement. For a number of different reasons, you may not want to work with a vendor that provides similar services to direct competitors. Notably, under Florida law (Florida Statutes § 542.335), there are very strict regulations regarding restrictive covenants. In order to be legally enforceable, non-compete agreements must be carefully drafted. Confidentiality Clause: A confidentiality clause is a contract provision that requires parties to refrain from disclosing certain information. Often, vendors receive access to some sensitive internal information. With a non-disclosure provision, parties may be able to make sure that key information is kept strictly confidential. Renewal/Termination Clause: Finally, it is generally recommended that parties address issues of renewal and termination when negotiating a vendor services agreement. If the commercial relationship works well, parties may want an opportunity to ensure that they can keep moving forward with similar contract terms. Of course, there is always the possibility that, for whatever reason, a business relationship with a vendor may simply not work out. To prepare for this scenario, companies want to consider including some type of early termination option within the vendor services agreement. Every commercial agreement is unique. Businesses should reach a vendor services agreement that suits their specific needs. Some provisions may simply not be relevant to your company. For example, your company may have little to no interest in bargaining for a non-compete clause. On the other hand, there are undoubtedly certain issues that will be extremely important to your business. By working with an experienced Orlando, FL contract lawyer, you can be sure that your vendor services agreement will be right for the needs of your company. Get Help From Our Orlando, FL Contract Attorneys Today At BrewerLong, our Florida contract law attorneys have the skills and experience to assist clients with the full range of issues related to vendor service agreements. We work tirelessly to protect the legal rights and commercial interests of our clients. If you or your company needs help negotiating, drafting, reviewing, or litigating a vendor services agreement, we are here to help. To set up a free, strictly confidential introductory phone call, please do not hesitate to contact our law firm today. With an office in Maitland, we represent companies throughout Central Florida, including in Orlando, Sanford, Deltona, Apopka, Winter Park, and Lake Buena Vista.