While building my business and working with clients, I / we often run into needs for contracts or trademarking questions that extend far beyond my branding and communications wheelhouse. This week, I've enlisted two amazing lawyers Rina Grassotti and Ashley Molson to share their legal considerations for food, fitness and wellness professionals.
Rina Grassotti's focus is on contracts, employment and litigation, you can find Rina at www.grassottilaw.com and Ashley Molson focuses on intellectual property and small business law you can find Ashley at www.molsonlawfirm.com.
Jacqui: What kind of contracts are important for small businesses? Anything specific to food, fitness wellness brands?
Rina: It really depends on the type of business but the rule of thumb here is to have a contract with any person or entity with whom you do business, whether its on a one-time basis or for an on-going type of arrangement. Common contracts that food, fitness and wellness brands need are consulting agreements, employment agreements, license agreements, NDA's, vendor agreements, rental agreements and waivers.
Jacqui: What can happen if these contracts aren't in place?
Rina: Not having tightly-worded contracts is one of the biggest mistakes a small business can make. All kinds of things happen, ranging from the headache of not getting paid and having no way to recoup those monies, to ambiguity over the parties respective rights, to much more serious and expensive issues such as who is responsible if someone is injured or who bears the financial loss when a relationship goes south. These disputes often lead to lawsuits, which can be financially burdensome or even crippling to a small business, especially when compared with the up-front cost of a contract.
Jacqui: Why is it important to hire a lawyer instead of use legal templates found online?
Rina: Because you don't know what you don't know. Templates can only get you so far, whereas a lawyer will fully understand your business and customize your contract so it best suits and protects your business. There are a lot of options that exist that a template can't deliver. What I think is important to remember is that these are legally-binding documents meant to protect you and your business. When something goes wrong, the words contained in that document are critical to determining the outcome and can be enforced for you or against you in court.
Ashley: Working with a lawyer will help you put your voice into your contracts and other legal dealings that your clients will have to come face to face with.
Jacqui: What are some common legal mistakes that you see made by food, fitness and wellness professionals?
Rina: Some of the common themes I see with food, fitness and wellness professionals is failure to protect themselves from legal risk by way of insurance policies, a proper business entity and legal contracts. Another common mistake is misclassifying employees as independent contractors.
Ashley: Make sure you look up HIPPA laws in how to take care of keeping client information secure. It's also important to have your clients sign waivers against injury, sickness, etc. and include disclaimers in your contracts, unless you are a medical professional your services should not replace medical advice.
LLC vs Corporation
Jacqui: Why is important for entrepreneurs to register as a corporation / LLC?
Ashley: It's extremely important to register your business as an entity (LLC or Corp.) Although you may be the face of your business, it's really important, legally that you separate the business from yourself. By setting up an entity you legally do just that. But just setting up the entity isn't enough. You also have to follow certain procedures in order to make sure you keep the protections that come with setting up the entity. So what protections do you get? Well you get beneficial tax benefits or protections. Many expenses become deductible and this is very attractive for business owners. Another benefit is financial protection in a very broad, but important sense. If a client sues you via your company for any particular reason and wins, if you have a separate entity, the court can only come after the assets of the business to pay your client or what lawyers like to say, is to satisfy the judgment. If you don't have an entity, the court can go after ALL of your assets. This would mean your house, your personal bank accounts, your cars, and etc. These protections alone should make it a no-brainer for someone considering setting up an entity or not. Of course, you have to be serious about having your business.... There's no need setting up an entity and paying filing fees if you're not going to be selling any products or services.
Jacqui: "Can you tell us a little bit about the difference between the two?
Ashley: An LLC is the most popular choice among small/solo business owners. Why? It's a really easy entity to set up and maintain. This is because filing fees are lower and there are less formalities that come with keeping the LLC "legal" as far as the state is concerned. All states have different annual and start up requirements and the requirements for LLCs are a lot less than corporations. The great thing is that LLCs and Corporations are both afforded the same asset protection that I mentioned above.
Corporations great for any business owner who knows they're going to have a lot of employees. They're also good for business owners who are starting with more capital. They're more expensive and more complicated, but they may come with more tax benefits than LLCs. "
Jacqui: What legal things should food, fitness and wellness professionals consider when building their website?
You should also include a disclaimer on your website.
Jacqui: Do you have any advice on trademarking programming?
Ashley: So this question has a pretty intricate answer. First I need to explain what can be trademarked. Trademarks are used for logos and branding. You can trademark a slogan, like "Making Healthy Cool Again" and you can also trademark your logo and the look and feel of that slogan. It's important for business owners to do this in order to have rights over something that may be very catchy. Many entrepreneurs assume they're so small no one will steal their name and or logo, but unfortunately, they're mistaken. This internet makes us all very susceptible.
Now trademarking is very tricky. There are do it yourself resources out there put together by attorneys, but you shouldn't also feel like you should avoid seeking legal help on this one. The USPTO (the office that approves of your trademark) is very finicky.
Now if you have a program you're running, you may be able to copyright the materials for it. Fitness professionals who put together books with workouts, pictures, stories, plans, calendars, tips, tricks and etc. should definitely copyright their work. Now, you automatically have copyright rights in your work once your ideas manifest on paper or the computer or wherever, but in order to enforce those rights you have to register the copyright.
Jacqui: When is it a good idea to have an NDA in place?
Rina: When to use an NDA is a judgment call and there are different schools of thought on the issue. The best rule of thumb is when you start talking beyond the basic concept of your business (the "what") and start sharing the sensitive information such as strategies and trade secrets (the "how"), or you start sharing sensitive documents or data. Investors will often balk at NDA's so sometimes you have no choice but to roll the dice, but most reputable consultants and businesses are willing to sign them.
The beautiful, amazing, accomplished pros: