Austin TX Business Law Blog

“Authentic brands don't emerge from marketing cubicles or advertising agencies. They emanate from everything the company does...” (Howard Schultz, CEO Starbucks)

Whether you take coffee or not, most people are familiar with the Starbucks brand. Not every company is a renowned franchise like the international Barista. Branding , however, is essential for every small business. A brand helps customers identify a company's products and services and distinguish them from the competition.

Brands, Logos Trademarks

A company's brand stands for its reputation, and this is often a matter of customers' perceptions. Customers need to know who you are and a brand identity helps to clarify your target customers. Having an effective brand strategy allows a business to communicate with customers in a variety of ways.

Often, this starts with a logo or a trademark which serves as the basis for packaging, the domain name of a website, media communications, as well as advertising and promotional materials. Having a trademark, moreover, requires registering that mark with the US Patent and Trademark Office. This is a complicated process that requires the advice of an attorney in order to prevent a trademark infringement lawsuit that could possibly damage your brand.

How to Develop a Brand

 There are a number of steps a small business needs to take in order to develop its brand. The first is to define the brand and its purpose so that you capture the interest of customers. One way to do this is with a "mission statement" that explains what your business stands for and what your products and services do.

Once your mission is established, the next step is to identify your target market. Not every customer will be drawn to your product or service. However, there is a customer base that is likely to buy from your business, especially those that identify with your brand. In the end, your target customers will decide whether or not your brand has value.

Lastly your brand must have a personality and represent your values. The values of your brand are the core principles that foster relationships with your employees, customers and vendors. Ideally, these values should be the foundation for a positive business culture. Put simply, a brand is important to a company and its products and services much like someone's personal or professional reputation is to him or her. 

The Bottom Line:

Your brand tells customers what to expect from your products and services and distinguishes you from the competition. Your brand strategy is essential for communicating and delivering your message which is really a promise to your customers. In other words, a brand flows from who you are, influences customers' perceptions and allows them to identify with you. Ultimately an effective brand strategy can give you an edge in the market place.

If you are considering starting a business or have already done so, an attorney can advise you on legal matters affecting your business.

Over 826,000 Texans have a license that allows them to carry a handgun with them in public. Until the beginning of 2016, you might never have noticed if an employee or customer had come into your place of business while carrying because their guns had to be concealed. Now the law has changed, and licensed gun owners are allowed to openly carry their weapons in visible holsters on their hip or shoulder. This change in law has forced Texas business owners to make a tough choice -- should they allow open carry in their place of business? Or only allow concealed carry? Or ban all guns?

At the Kumar Law Firm we are helping several businesses in the Austin area work through this issue. Figuring out what your gun policy is going to be is an important decision because it may end up impacting your bottom line. Folks on both sides of the debate over the proper role of guns in society are very passionate, and have committed to boycotting businesses that disagree with their philosophy. Businesses that ban guns are being boycotted by pro-gun advocates, while businesses that allow guns on their premises are being boycotted by anti-gun advocates.

If a business wants to allow patrons and employees to carry, it probably doesn’t need to do anything. Unless the place of business is in a zone where guns are prohibited by law, at a school for example, open and concealed carry are legal by default.

If a business wants to prohibit guns, it must post proper signage.
• Separate signs are required for banning open carry and concealed carry so businesses can allow concealed carry but not open carry, or vice-versa.
• Signs must have 1-inch block lettering.
• Signs must be written in both English and Spanish.
• Signs must be posted at all entrances. Posting signs only at the main entrance is insufficient.

Business owners who allow open carry still have complete control over their premises. So, if a customer enters and begins to act suspiciously, the business owner still has the right to ask that person to leave, whether or not he or she is open carrying. If a customer refuses to comply with a request to leave, the police can be called.

In addition to considering what the customer may think about open and concealed carry, business owners must also consider how they and their employees feel about the issue. Business owners are allowed to set separate rules for employees and customers, and should not hesitate to do so if it is in their business interest.

If you have questions about how to handle open carry in your business, consult with a competent, informed business attorney.

One of the first question a business must ask itself is “how should we organize?” Of course, the answer to this question varies significantly based on context, however the legal organization of one’s enterprise should be of preeminent concern from the get-go – and here are a few reasons why:

 

            #1: Liability is Everywhere: It’s true – just ask any one of the thousands of business facing expensive, time-consuming litigation each year. From the food industry to technology, there is no private sector business that is immune to liability, which means the savvy entrepreneur must take steps from Day 1 to protect against its pitfalls.

 

            #2: Exposure May be Reduced: There are a number of positive action steps a start-up can take to help limit exposure to liability – and many are inexpensive, no-brainer type options that can make the difference between booming and bankruptcy. More on that in a minute.

 

            #3: It’s an Investment: For the start-up, expenses like legal fees and organization consultations may seem beyond the budget. However, the costs of litigation far exceed that of a short legal consultation and incorporation package – so think of it as the company’s first official investment in its future.

 

When it comes to incorporating in Texas there are several options to consider when forming a business, including:

 

• Private domestic corporation
• Close corporation
• Benefit corporation
• Foreign corporation
• Non-profit corporation
• Limited liability company
• Partnership
• Professional associations & corporations (e.g., law, medicine, architecture)

 

Of course, each option carries distinct benefits which may be best-suited to the particular endeavors of a start-up entity – and an experienced Texas business attorney can help officers choose the best way to incorporate from the outset, keeping in mind the factors listed above.

 

If you are considering or already have started your own business, you are probably overwhelmed by the legal implications of doing so.  While this is not an uncommon feeling as most business owners are not lawyers, you should still have basic knowledge of some of the salient legal issues facing business owners.  Here are three that we think are important.

Vicarious Liability

A small business owner can be liable for certain actions of his or her employees.  This is known as vicarious liability.  Generally, an employer is liable for the actions of an employee when the employee was acting within the scope of his or her employment.  While this seems pretty narrow, the courts have applied vicarious liability to a variety of situations. An entrepreneur should have a general liability insurance policy as a means of protection. 

Overtime Pay

As a business owner and employer you must also be aware of overtime laws.  Depending upon an employee's classification - either exempt or non-exempt, he or she might be due overtime for any work above and beyond forty hours per week. A small business owner needs to be up to date on the newest rules and regulations and be sure to classify employees correctly to avoid being penalized.

Intellectual Property

Entrepreneurs are often faced with intellectual property concerns. Intellectual property includes copyrights for works of art, patents for inventions and trademarks, which apply to brands.  Business owners can be accused of infringing someone else’s intellectual property or claim that someone else is using his or her IP  without authorization.  Intellectual property litigation is expensive and time consuming, and can have a negative effect on your business reputation.

 If you are considering starting a business or have already done so, an attorney can advise you on these and any other legal matters affecting your business.

As a small business owner, am I required to maintain a workers’ compensation policy?

Historically, maintaining a workers’ compensation policy has been a mandatory line item on the checklist of business ownership. However, the growing trend within Texas – and nearby Oklahoma – is to allow business owners the option to opt out of the heavily regulated workers’ compensation system in favor of an alternative workplace injury protocol, which the employer is free to elect and implement in accordance with Texas workplace injury laws. In other words, so long as employees are covered in the event of accident, the opt-out plan will likely be enforceable.

However, as the costs to run a business continue to rise, employers have been seeking alternative workplace injury plans from one of the dozens of available options – and some employees are claiming that opt-out policies do not offer the same rate of coverage as a traditional workers’ compensation policy.

According to statistics, 1.5 million Texas workers are not laboring under the benefits of a traditional workers’ compensation policy, and are left in the largely unregulated realm of the private injury policy – and the differences are somewhat startling. For instance, one policy only covers workplace injury-related medical bills for 2 years, whereas workers’ compensation covers expenses for as long as necessary. Other plans were found to exclude issues including bacterial infections, “sickness and disease,” and chiropractic care. As well, certain private plans provided the option for managers to accompany workers to doctors’ appointments, as well as deny claims outright if not reported by the end of a shift.

Saving money on an opt-out policy can be great for the bottom line, provided the terms will ultimately hold up under Texas law. For help in this area, or to learn more about the legalities of small business ownership, consider working with a Texas business attorney today.

What sort of backlash could a business face amid allegations of unfair price schemes?

When it comes to running a small business, choosing a price scheme that both drives the profit margin and attracts customers can be tricky. On the one hand, a business wants to be competitive in the market climate and, on the other, it needs to make a reasonable profit. There are a number of pitfalls to watch out for when attracting new customers -- such as charging new accounts, and deducting expenses accurately – just ask the recently embattled Chesapeake Energy Corporation.

In recent news, Chesapeake Energy has been named in over 400 lawsuits by disgruntled landowners accusing the conglomerate of cheating customers left and right – resulting in possible liability topping $1 billion. According to allegations, Chesapeake has presented thousands of landowners with lease agreements concerning over 25,000 tracts of land around Texas. Allegedly, these landowners – seemingly unfamiliar with Texas underground oil and gas laws – signed agreements with Chesapeake, not knowing the full measure of their entitlements to royalties on energy produced by the land.

More specifically, landowners assert that the company wrongfully miscalculated the price of gas. and charged landowners transport costs and expenses after the gas had already been transmitted.

These cases have been set for a series of trial dates docketed to begin in early 2016. Earlier this year, the company reached a settlement with several investors over similar claims, the details of which have not been publicly released.

One set of landowners claims they have not seen a royalty check in months. Though they say they never expected to “get rich” off the land, one landowner has stated, “I'm just hoping there will possibly be some back payments, and it will force Chesapeake to pay what is due,” -- a statement resoundingly familiar among the large group of plaintiffs seeking retribution from Chesapeake.

Is Texas a good place to start a business?

When we think of new business startups, our minds wander to places like New York City, Los Angeles and Silicon Valley. While these are great places for entrepreneurs to get started, are they any better than the state of Texas? Billionaire Mark Cuban doesn’t think so.

Cuban is a self-made billionaire who got started in the Lone Star State. Initially, he made his money by creating a streaming radio service, which was eventually bought by Yahoo! in 1999.  Now, he is a star of the hit TV show "Shark Tank." On this reality show, entrepreneurs have the opportunity to pitch their companies to wealthy investors who might financially back them if they like what they hear. Cuban has now invested in over 100 companies as a result of his spot on the show. 

Cuban was asked to speak at the North Texas Commission annual meeting. His topic was “how to think beyond the pitch.” During his presentation, he explained to the audience that he thinks Texas is one of the best states in which to start a company. While places like Silicon Valley are known for billion dollar buyouts, Texas is a great place to grow a business into an empire.  He also mentioned that he is trying to move some of the manufacturing he does in China back into the United States, specifically to Deep Ellum, Texas. Some of Cuban’s companies had booths at the meeting and were selling products or handing out samples and coupons to attendees.

According to Mark Cuban, if you are an entrepreneur in Texas, you can rest assured that you are in one of the best locations in the country. Nonetheless, nothing does more for your business than the representation of a knowledgeable and experienced business law attorney.

What are the benefits of incorporating my small business in Texas versus other states?

When starting a business, one of the first steps to consider is where to incorporate? Legally speaking, deciding where to incorporate is one of the most pivotal decisions an entrepreneur can make, as the company will be subject, as it grows, to the laws of not only the state(s) where it does business, but its state of incorporation as well. Accordingly, businesses should take into consideration the various tax, civil, procedural, and dispute resolution laws in place when making this decision – all of which will undoubtedly impact at some point during the life of the business.

In a recent survey conducted on thousands of small business owners in Texas, the Lone Star State ranked first as the friendliest small business state in the U.S. The survey reviewed several areas, including: ease of starting a business, state employment regulations, taxes, zoning, and environmental laws. Receiving an “A” in nearly every category, small business owners touted the relative ease with which a start-up in Texas can obtain the necessary licensing  as well as benefit from the overall unobtrusiveness of state environmental and zoning regulations. Small businesses also reported favorable tax treatment, including paying virtually no income taxes in most cases.

If you operate a start-up business and are considering incorporating in Texas, working with a reputable business attorney is one of the first steps to take to ensure a seamless transition. While the steps to incorporate and gain legal recognition of your business entity may seem straightforward, working through the state and federal hiring and employment regulations may not be as easy. An experienced Texas business attorney can help ensure that your enterprise meets applicable zoning and permit laws. This is especially important if your business is in the industrial or manufacturing sector.

If you are in need of assistance with your start-up business, please contact the Kumar Law Firm in Austin, Texas today: 512-323-6060.

Which new laws on the Texas Books will impact my small business this year?

Each year, the Texas legislatures considers, passes and enacts hundreds of new statutes. Some are relatively minor amendments; others involve sweeping reforms with major legal impact.

For the small business owner in Texas, the most recent enactments – which took effect September 1^st – may have an impact depending on the nature of the business and the type of transactions it involves. The following offers a rundown of some of the most prominent legal changes. An experienced small business attorney will be able to best advise you as to more nuanced enactments impacting your particular industry:

• Handgun Permits as ID: If your business requires proof of identification, customers may now show their handgun permit as a valid form of government-issued identification. This change does not apply to traffic stops or airport security, however.
• Harassment of Interns: Sex-based discrimination and harassment laws have been extended to cover unpaid interns.
• Nursing home compliance: If you are involved in the long-term care industry, new changes have limited to three the number of “serious health and safety violations” that may be assessed before your state license is revoked.
• Shark fins: Engaged in the fishing industry? A new law has made it illegal to harvest certain species of shark solely for their fins. In addition, shark fins may not be sold, possessed, traded, bartered or possessed.
• Liquor purchases: If an individual enters a liquor store close to the cut-off time, and is clearly browsing with the intent to make a purchase, the shop owner may transact the sale even if it takes place past the technical cut-off point.

Overall, approximately 700 new laws took effect on September 1^st, some of which may be pertinent to your small business. If you would like to learn whether the new laws will result in any changes to your business structure, and to ensure your compliance with revised Texas laws, please contact one of our experienced business attorneys at The Kumar Law Firm today: 512.960.3808.

Can my employer prevent me from changing jobs to work with a competitor?

Non-compete clauses are an extremely common component to the hiring process, and are used to prevent employees from leaving one company to work at a competitor, presumably taking clientele along in the process. 

In general, a non-compete agreement is enforceable if it is reasonable in scope. In Texas, this means that the agreement must not cover an unreasonably large geographic area (i.e., the entire state of Texas) or last for an unreasonably lengthy amount of time (i.e., ten years). Reasonableness will depend on the nature of the industry, the type of work performed, and the employee’s factual ability to cause financial harm to the first employer. 

However, there is a point where a non-compete clause can go too far, and may actually cross the line into an unlawful restraint on trade. Moreover, as several members of Congress have pointed out, businesses have begun restraining low-wage workers with non-compete agreements as well, creating additional hardship for a population already facing financial struggles. 

In June, 2015, several U.S. Senators introduced the Mobility and Opportunity for Vulnerable Employees Act. This Act, if approved, would prevent employers from attempting to restrain former employees from working for competitors if the workers earn less than $15.00 per hour, less than $31,200 annually, or the minimum wage in the worker’s municipality. 

In the words of Senator Chris Murphy (D-Conn.), non-compete agreements hidden in low-wage worker contracts deliberately trap these workers in low-paying jobs – and that’s unacceptable….I worked hard on this bill because I believe that if you’re making less than $15 an hour, the government has a moral duty to stop companies from exploiting your hard work by preventing you from using your skills and experience to work your way up.”

Currently, a number of low-wage food service companies embed non-compete agreements in employment contracts, preventing counter-service workers from procuring a job at a competitor. 

If you have questions about non-compete agreements, or would like to discuss the proper way to implement this strategy into your hiring procedures, please contact the Kumar Law Firm, serving Austin, Texas and surrounding areas today at 512.960.3808.

What should we be considering as we plan to open a new restaurant in Texas?

Restaurant start-ups are a hot industry right now, and entrepreneurs are too often mired in the details of menu and décor to consider the legal ramifications of embarking on their new venture. Fortunately, The Kumar Law Firm can help organize and protect your team, whether you operate a food truck or a five-star rooftop restaurant.

The initial steps in creating a restaurant business are pre-planning and choosing a suitable, appropriately zoned location. Finding the perfect location depends on a number of factors, with some restaurants -- such as barbeque joints -- having additional hurdles to overcome. Earlier this year, for instance, the Austin City Council considered a proposal to regulate barbeque smoke known to waft into residential areas – apparently bothering nearby neighbors and causing a nuisance for other surrounding businesses. The council, however, ultimately voted 4-0 against the measure, while encouraging residents to make use of the city’s 311 service to launch complaints about “air pollution.”

Once beginning restaurant entrepreneurs have chosen an appropriate location, they must consider the various state and federal food safety regulations, which govern everything from food temperatures to proper cooking techniques. In addition, businesses must maintain a sizable insurance policy to cover liability stemming from foodborne illnesses. Such illnesses are not always preventable, even with the most careful preparation techniques.

Of course, hiring and maintaining employees also requires legal knowledge, particularly in regard to insurance, taxes, payroll, anti-discrimination policies, and other human resource issues wrapped up the opening of any business. An experienced start-up attorney can be invaluable in helping to draft contracts, defend against vendor/customer disputes, and offer general legal advice, not only during the first few years, but throughout the course of enterprise's operation.

If you are considering starting up a restaurant business in Austin or surrounding areas, please contact a business law attorney at The Kumar Law Firm at 512.960.3808 so that we can supply you with information about how to best protect your assets and ideas.