Molosky & Co.Molosky & Co.2026-03-27T14:56:14Zhttps://www.molosky.com/feed/atom/WordPress/wp-content/uploads/sites/1603808/2022/08/cropped-site-icon-image-32x32.jpgOn Behalf of Molosky & Co.<![CDATA[The legal risks of scaling your business too fast]]>https://www.molosky.com/?p=468892026-03-27T14:56:14Z2026-03-27T14:56:14ZWhere fast growth creates hidden legal exposure
As the business expands, the legal foundation that once worked may no longer align with current operations. You may face risks that do not appear until something goes wrong. That shift tends to show up in a few predictable areas:
Using contracts that no longer match reality: Agreements you signed early on may not fully reflect your current pricing or how you deliver services. They may also leave gaps in how risk is shared
Operating with unclear ownership and equity terms: Growth can strain relationships when roles shift or contributions change. Expectations that once felt clear may no longer align
Hiring without a clear structure: Rapid hiring may lead to misclassification. It can also create uneven policies or unclear lines of responsibility
Expanding into new markets without full compliance: Entering new regions or industries can trigger licensing, tax or regulatory requirements you may not have anticipated
Relying on insurance that no longer fits your risk: As operations grow, existing policies may not reflect the level or type of exposure your business now faces
These issues often remain hidden while the business is growing, only to surface during a dispute, audit or major transaction, when addressing them may become more complex and more expensive.
Growth without structure invites disputes
As operations scale, more people become involved, which increases the need for clear agreements and defined roles. Without that structure, small misunderstandings may turn into serious disputes. A vague partnership agreement could lead to deadlock, while an informal vendor arrangement may result in a breach of contract claim. Disagreements over authority or compensation can also disrupt daily operations.
These disputes often do not stem from bad intent. They tend to arise when expectations were never clearly defined. Growth places pressure on those gaps and brings them to the surface, which is where a more deliberate legal structure starts to matter.
Legal infrastructure as part of your growth strategy
As expansion introduces more complexity, the legal framework may need to evolve with it. This approach can help reduce friction and support more stable operations. Areas that often require attention include:
Updating key agreements to reflect current operations: Contracts may start to fall out of sync with how the business actually functions today
Clarifying ownership terms and decision-making authority: Defined roles can help reduce confusion and limit the risk of internal conflict
Reviewing insurance coverage against current exposure: Policies may not fully reflect the scale of operations or the type of risk the business now carries
Aligning compliance practices with expansion: Regulatory obligations can shift as the business enters new markets or offers new services
Documenting processes and expectations across the business: A clearer internal structure can help limit misunderstandings and support consistency
Taken together, these areas reflect how growth can place new demands on the business. When the legal framework keeps pace, it can help reduce friction and limit the risk of issues surfacing at more critical stages.
Building growth on a stronger foundation
Not all growth strengthens a business. Scaling too quickly without the right legal foundation can create risks that affect operations, relationships and long-term value.
Taking time to align legal structure with the pace of growth can help reduce exposure and support more stable progress over time.]]>On Behalf of Molosky & Co.<![CDATA[What does a good partnership agreement look like?]]>https://www.molosky.com/?p=468712025-12-31T15:40:26Z2025-12-31T15:40:26ZA good partnership agreement can safeguard your enterprise. This is because it’s more than a form that you sign and forget. This document can shape how business decisions are made, how money is handled and how problems are resolved. When it is done right, it brings clarity instead of confusion.
In business, you might think trust alone is enough to run a partnership. However, even strong relationships benefit from written expectations. A clear agreement helps you plan for growth while also preparing for disagreements that may arise over time.
Clear roles and responsibilities
A strong partnership agreement clearly outlines who is responsible for what. You should be able to see each partner’s role without guessing. This avoids overlap, resentment and gaps in daily operations.Decision-making power should also be defined. Some choices may require full agreement, while others may fall to one partner. When these boundaries are clear, you reduce the risk of unnecessary delays and conflicts with one another.Additionally, the agreement should explain time commitments. If one partner is active and the other is silent, expectations must be clearly stated upfront to maintain fairness.
Financial terms and exit planning
Money is often where partnerships struggle. A good agreement should clearly outline how profits and losses are to be shared. It should also say when payments are made and how expenses are handled.Also, ownership percentages should be stated in plain language. This helps you understand voting power and long-term value. If contributions change over time, the agreement should explain how adjustments are made.Do not forget exit terms. The agreement should outline the next course of action in the event of death, retirement or other unforeseen circumstances. Planning for these moments protects the business and the people behind it.
Seeking legal help
A good partnership agreement is not about expecting problems but setting a stable foundation so you can focus on growth. When expectations are written clearly, you reduce uncertainty and stress. Because partnerships involve long-term commitments and shared responsibility, seeking structured legal guidance during the process can be helpful. This allows you to slow down, think through real scenarios and help ensure the agreement reflects how you truly want the partnership to work. ]]>On Behalf of Molosky & Co.<![CDATA[How shareholder agreements can prevent litigation]]>https://www.molosky.com/?p=468692025-10-04T14:03:10Z2025-10-04T14:03:10ZBy clarifying expectations
Shareholders may sometimes have unrealistic expectations based on their agreements with other businesses. Therefore, it is of the utmost importance that shareholder agreements clearly detail standards regarding dividends, voting rights and long-term development plans for the organization. The more thorough a shareholder agreement is, the less likely it is that disagreements about the business might lead to litigation.
By requiring other solutions
Adding alternative dispute resolution clauses to contracts can be an effective way to deter shareholders from using lawsuits as their first response to dissatisfaction. When a contract requires mediation or arbitration, shareholders may have to sit down and discuss their disputes with majority shareholders or company leadership in a confidential setting instead of taking the matter to court.
By preventing voting gridlocks
In some cases, shareholder lawsuits relate to issues that arise at meetings where a vote is necessary. It is possible to prevent such situations by adding special provisions to shareholder agreements. Granting certain shareholders veto rights or clarifying how to address disputes that shareholders cannot resolve at a meeting can limit the likelihood of frustrated shareholders choosing to file a lawsuit.
Drafting custom shareholder agreements can limit some of the risks that come from accepting private investments for a publicly-traded business. Given how costly litigation can be and how it can damage the reputation of a business, seeking to limit lawsuits brought by shareholders is often a smart choice.]]>On Behalf of Molosky & Co.<![CDATA[What you need to know about starting a company in Michigan]]>https://www.molosky.com/?p=468672025-07-09T20:20:40Z2025-07-09T20:20:40ZStarting a company in Michigan requires careful planning and understanding of the state’s legal and regulatory requirements. Whether you are launching a small family business or a large-scale startup, taking the proper steps from the outset will help to protect your interests and set your business up for long-term success.
First, the fun part. Choosing a business name is going to make your other set-up efforts connected to something “real.” Your name must be distinguishable from other businesses registered in Michigan and comply with state naming rules. You can check name availability and reserve your desired name through LARA’s online portal. If you plan to operate under a different name than your legal business name, you will need to file for an assumed name, also known as a DBA (Doing Business As).
Structures, tax IDs and foundational documents
Next, you’ll need to choose the best available business structure for your particular venture and vision. Michigan recognizes several entity types, including sole proprietorships, partnerships, limited liability companies (LLCs) and corporations. Each has unique legal, tax and operational implications. Sole proprietorships are the simplest, requiring no formal registration if you operate under your own name, but they do not protect personal assets from business liabilities. LLCs are popular for small and medium-sized businesses because they provide liability protection while allowing flexible management and pass-through taxation. Corporations offer stronger protections and growth potential, particularly for businesses seeking outside investors, but they require more formalities and compliance.Once you choose a structure, you will need to register with the Michigan Department of Licensing and Regulatory Affairs (LARA). LLCs and corporations must file formation documents, such as Articles of Organization for an LLC or Articles of Incorporation for a corporation. You will also need to appoint a registered agent with a physical address in Michigan to receive legal and government documents.Most businesses require federal and state tax identification numbers. You will likely need an Employer Identification Number (EIN) from the IRS, even if you do not have employees, to open business bank accounts and file taxes. Depending on your business type and location, you may also need state tax registration for sales tax, use tax or other industry-specific taxes.Michigan also requires certain licenses and permits for certain industries, such as food service, construction and childcare. Local municipalities may have additional zoning or operational permit requirements, so it is important to check with city or county offices where you plan to operate.Finally, drafting strong governing documents, such as operating agreements for LLCs or bylaws for corporations, can help to clarify ownership, management responsibilities, profit distribution and conflict resolution processes. These documents can help to minimize disputes between business partners and demonstrate sound governance to banks and investors.Starting a new business isn’t easy, but with sound guidance and attention to detail, it can be done successfully. ]]>On Behalf of Molosky & Co.<![CDATA[Key due diligence considerations before a merger or acquisition]]>https://www.molosky.com/?p=468662025-04-13T21:58:24Z2025-04-13T21:58:24Zcaveat emptor implies that those purchasing items from others need to take appropriate steps to protect themselves. Business owners, executives and investors typically need to protect themselves when preparing for a business acquisition transaction or a merger.
Proper due diligence or pre-transaction research is critical for the protection of those contemplating a large business transaction. Many investors and business leaders choose to partner with law firms that can assist with every step of the process, from drafting offer documents and reviewing final paperwork to performing due diligence before the transaction occurs.
What considerations require careful review and investigation before a merger or acquisition?
The state of the company's finances
Those hoping to sell a business typically want to optimize the return on the transaction. They may achieve that goal by inflating the asking price or misrepresenting the company's finances on paper. For example, the company may not accurately report the depreciation of high-value equipment and machinery that may be somewhat old.
The party selling the company might provide misleading figures regarding future revenue estimates. Those preparing for a merger or acquisition need to conduct a thorough review of all financial disclosures to ensure that the price offered or terms negotiated are reasonable.
The liability of the organization
Future and current liability are key considerations when negotiating terms for a merger or acquisition. Financial liabilities are important to review. The company may have worked as a factoring service or may have large outstanding debts to cover. Those obligations can cut into company profits for years to come.
Legal liability is another concern. Perhaps there has been an increase in customer complaints or an uptick in issues with workers. The organization could be at risk of product defect or harassment lawsuits. Purchasing or merging with a business typically results in a transfer of liability as well. It is therefore critical to identify potential sources of liability and either address them with special contract terms or adjust the price offered for the company to reflect the degree of risk.
Conducting an in-depth review with a skilled legal team before a large business transaction can require hundreds of hours of work spread out over many months. Those already running a business or managing their own careers may not be in a position to thoroughly investigate all of the relevant details that can impact a merger or acquisition transaction. Securing the right support before making any firm commitments regarding a business transaction can help protect those hoping to invest or to expand their business operations.]]>On Behalf of Molosky & Co.<![CDATA[What happens at the end of a franchise agreement?]]>https://www.molosky.com/?p=468442025-01-15T11:44:57Z2025-01-15T11:44:57ZContract terms can be restrictive
Businesses offering franchise opportunities often go to great lengths to protect themselves. The agreements signed between franchisees and franchisors include many different terms. They may include very thorough restrictive covenants in the initial agreement negotiated with the franchisee.
It is common to include non-compete agreements that prevent the franchisee from opening a similar competing business for several years after the termination of a franchise agreement. Any attempt to develop a competing brand might result in litigation.
They may also be subject to a non-disclosure agreement that prevents them from sharing information about company recipes or operational practices. Non-solicitation agreements could prevent a franchisee from trying to hire those who work for the franchisor or do business with the companies that patronize the franchise operation. Frequently, franchisees hoping to branch out on their own either need to move into a different industry, relocate geographically or wait a specific amount of time before doing so.
Reviewing the terms of an initial franchise agreement with a skilled legal team can help franchisees determine the best course of action when they are ready to terminate the agreement and start working for themselves. Those hoping to free themselves from the restrictions of a franchise arrangement may need help avoiding violations that could lead to litigation and financial penalties, and that’s okay.]]>On Behalf of Molosky & Co.<![CDATA[Advantages of business partnerships]]>https://www.molosky.com/?p=468312024-10-11T14:29:39Z2024-10-11T14:29:39Zdue to strong partnerships. From sharing risks to pooling resources, partnerships offer several advantages that can propel businesses to new heights.
Shared resources
One of the most noteworthy benefits of business partnerships is the pooling of resources. Each partner brings different assets to the table—whether it’s:
Financial capital
Knowledge
Networks
For example, one partner may have experience in product development, while another excels in brand marketing and advocacy. This blend of skill sets can lead to:
A more efficient business model
Better decision-making
Faster problem-solving
Partnerships allow entrepreneurs to leverage each other’s knowledge, helping the business grow in ways that might not be possible for a solo entrepreneur.
Additionally, the division of labor based on knowledge means tasks are handled by the right individuals, boosting productivity. For instance, one partner could focus on operations while the other manages client relationships.
Risk sharing
Starting and running a business always involves a degree of financial, operational or market-related risk. A partnership allows these risks to be shared, which is especially beneficial in the early stages of a business when costs can be high and revenues uncertain.
By distributing financial responsibilities and sharing liabilities, entrepreneurs can take bigger risks, which may lead to more significant rewards. For example, if one partner contributes a larger portion of capital, the other might take on more operational duties. This can help balance the overall workload and risk exposure.
Access to expanded networks
Networking is critical to business success, and a partnership can significantly expand an entrepreneur’s reach. Each partner brings their business connections to the table, creating a broader network of:
Potential clients
Reliable suppliers
Interested investors
These extensive business networks open new business opportunities and provide valuable support and guidance.
Business partnerships offer numerous advantages for entrepreneurs, from shared resources and risk mitigation to expanded networks. Entrepreneurs hunting for suitable partnerships can benefit from knowledgeable legal guidance to help ensure that they only go into business with a partner once expectations, rights and responsibilities have been clarified in enforceable ways.]]>On Behalf of Molosky & Co.<![CDATA[Renting vs. buying: Finding the perfect fit for a business]]>https://www.molosky.com/?p=468292024-07-26T10:47:48Z2024-07-26T10:47:48Zentrepreneurs have to decide whether they want to rent a commercial property or take the plunge and purchase one.
Making the right choice requires factoring in the circumstances unique to each entrepreneurial journey. By understanding both options, entrepreneurs can be empowered to make the best choice for their business’s unique needs.
The allure of renting
Renting a commercial space can be an appealing option for startups and businesses with fluid growth projections. Commercial leases typically range between one to five years, and this gives business owner the flexibility to assess their commercial space needs once the lease is up. Suppose the current commercial space no longer aligns with the business’s unique needs; the entrepreneur has the liberty to relocate to a more fitting commercial establishment. This adaptability is invaluable for young companies still finding their footing.
Renting is alluring due to the lower upfront costs of setting up a business as compared to purchasing a commercial establishment. Even though renting a commercial space requires a security deposit, this is much lower than a down payment and hidden closing costs associated with purchasing a commercial space. Therefore, renting can allow an entrepreneur to channel their capital towards vital areas like:
Equipment
Inventory
Marketing
Despite the obvious benefits of renting, this option also comes with drawbacks. Lease agreements can be restrictive, limiting the ability to customize the space. Rent increases can also pose financial challenges, and there is no opportunity to build equity in the property.
The power of ownership
While the flexibility of renting is undeniable, purchasing a commercial space can unlock unique benefits that can fuel long-term success. By gaining ownership of their commercial space, an entrepreneur earns a valuable asset whose value could appreciate over time. An entrepreneur may choose to sell their commercial property for a profit when the business outgrows it.
Owning a commercial space also gives an entrepreneur the liberty to customize the unit to suit the enterprise’s unique needs. This might involve:
Renovations
Painting
Installing specialized equipment
These modifications can streamline business operations and promote better service delivery.
When deciding whether to rent or purchase a commercial space, entrepreneurs can benefit from seeking appropriate legal guidance to put things into perspective. While renting provides flexibility, entrepreneurs also have to consider that ownership may give them the power to fuel long-term success.]]>On Behalf of Molosky & Co.<![CDATA[What if commercial landlords won’t uphold force majeure clauses?]]>https://www.molosky.com/?p=468262024-04-19T11:12:47Z2024-04-19T11:12:47Zforce majeure clause could protect a business from financial liability when the company cannot operate due to factors outside of the company's control.
What if a landlord claims that the force majeure clause doesn't apply given the circumstances?
Litigation might be necessary
The purpose of a force majeure clause is to eliminate financial obligations when a business can no longer operate due to no fault of organizational leadership. A force majeure clause acknowledges that there are sometimes circumstances outside of anyone's control that can prevent a company from functioning the way it usually does.
In theory, a force majeure clause provides an opportunity for a commercial tenant to prematurely end a commercial lease or avoid collection efforts for unpaid rent. A landlord might try to claim that the factors do not reach the necessary standard to trigger the force majeure clause in a bid to continue demanding rent from a commercial tenant.
If a commercial landlord refuses to abide by the terms included in a lease agreement, then a tenant may have few options other than to take the matter to civil court. Provided that a judge agrees that the circumstances are outside of the company's control, it may be possible to end the lease early despite the landlord's protests.
Frequently, a business attempting to use a force majeure clause to end a tenancy may also need to address other challenges simultaneously, such as business interruption insurance claims and disputes about contracts that the business cannot fulfill due to interrupted operations.
Given that a lease could potentially persist for years beyond when a company ceases to function due to factors outside of its control, adding a force majeure contract in a lease can be a very intelligent decision when agreeing to rent a commercial property. Including thoughtful terms in a lease and seeking to enforce them using litigation, if necessary, can help businesses limit the harm caused by a sudden cessation of operations.]]>On Behalf of Molosky & Co.<![CDATA[3 major concerns for those considering franchise opportunities]]>https://www.molosky.com/?p=468052024-01-23T11:43:30Z2024-01-23T11:43:30ZTerritory protections and expansion
One of the reasons that franchises can be lucrative for entrepreneurs is that they might be the only location of a popular brand in a sizable geographic location. Many franchise opportunities come with territory protection. The company promises not to allow another franchise to open within a certain distance of someone's new facilities.
Potential franchisees need to consider how much distance the company guarantees between their business and someone else's. The duration of that agreement is also important. If it only lasts for one year, the franchising may start struggling when competitors open up nearby. Additionally, they may need to consider the implications of territory rules on plans for expansion. They may not be able to open additional units in a saturated market.
Investment requirements
Every franchisor has specific requirements for franchisees. Typically, those requirements include having a certain amount of capital set aside beyond what someone intends to invest in the business initially. Those capital requirements are often quite significant and may make certain franchise opportunities prohibitively expensive.
Training and marketing support
Simply buying into a pre-existing company does not guarantee success or profit. The person opening the franchise likely requires training on how to run a business and conform to the franchisor's standards. The amount of training provided by the franchisor can therefore be very important to the successive individual franchisees. The company's commitment to local marketing is also an important consideration. Advertising campaigns that don't reach local platforms may not help drive business to a franchisee's location.
Rather than rushing into a franchise opportunity, entrepreneurs and investors need to consider their options very carefully. Learning more about how a franchise operates, and seeking legal guidance accordingly, can help someone determine what opportunities might be best for them.]]>