Q1 I created an app which did well over Christmas & made some money. Do I have to tell my employer?
This will largely depend upon what is contained in your employment contract and the circumstances in which the app was created. Many employment contracts contain provisions which mean that anything created in the employer's time (i.e. your working hours) will belong to the employer and not to you. If you created the app during working hours, and/or on work equipment, it could infer that the app does in fact belong to your employer, in which case you would need to notify them and account for any money made. There may also be clauses in your employment contract which restrict you from operating in competition with your employer. Depending on the wording of the restrictions, you may be in breach of your contract if your app competes with your employer's products and/or services.
Q2 I am looking at buying a Franchise in 2016. How could a Solicitor help me choose the right opportunity?
A Solicitor will meet with you to ascertain your objectives and what you are seeking from the opportunity. They will then help by reviewing the franchise agreement, explaining the terms of business and assessing whether it is a good fit for your objectives. They can also help by trying to negotiate better or more suitable terms of the agreement for you if you want them to do so.
There are many aspects to consider when buying a franchise, such as intellectual property rights and what licences and/or ownership you have in relation them. You will also need to give consideration to employment matters, such as having contracts of employment for any employees you may take on and policies and procedures for matters such as grievances and disciplinary issues. If you require a premises for your franchise, a solicitor can also help you with negotiating the terms of a lease and advise as to the title of the building too, for example by checking if there are any covenants which will prohibit you from carrying out the business activity.
Solicitors are usually unable to give financial advice so bear in mind you are also likely to want to speak to an independent financial adviser to discuss aspects arising from the accounts and to advise more generally on the financial opportunities different franchises may offer.
Whenever considering buying a franchise it is worth bearing in mind the British Franchise Association Code of Ethics, which governs the behaviour of franchise practitioners.
Q3 I see a lot about crowdfunding investments these days. Are they regulated under UK law like other investment vehicles?
Crowdfunding has become very popular recently as it helps entrepreneurs reach a large number of people who each invest a small amount in a new business to help it reach its funding objective. There are three forms of crowdfunding: donation (people give money to organisations whose activities they want to support), debt (money is lent to the organisation in return for interest payments and a repayment of the capital over a period of time) and equity (direct or indirect investment by buying products such as shares or debentures). The Financial Conduct Authority (FCA) established industry regulation last year for debt-based and investment-based crowdfunding, but it is based on the type of product offered rather than the risk profile of the business that will benefit from the investment. As these forms of crowdfunding are activities regulated by the FCA under the Financial Services and Markets Act (FSMA), you should make sure that only a person or firm authorised by the FCA advises you in relation to this. Donation-based crowdfunding is not included in the regulation.
Q4 Would I be able to obtain a loan against my house to invest in a Business?
It is possible to borrow money against your house by either a secured loan or a further advance against your mortgage and subject to your own financial circumstances. There are likely to be conditions with any such lending, and particularly where you have an existing mortgage you should check terms that may already be in place as to any further lending. The best person to advise you in the first instance will be your mortgage broker, bank or independent financial adviser. Bear in mind that borrowing against your home will always carry the risk of re-possession if you unable to make the repayments. Financial advisers will be able to discuss different options with you, as well as the potential for obtaining any other types of loan which may not need to be secured against your home.
You should also remember that if you jointly own the property with another person, you will need their consent to use the property as security for the business. They will also likely need to obtain their own independent legal advice as a part of the lending process.
Q5 I am planning on working from home in 2016. Do I need any kind of insurance of other official certification?
This may depend upon the nature of the work that you do and if you require any minimum levels of insurance to be in place. Your mortgage lender and home insurance company may also be required to give their approval and again this will depend upon the type of work you undertake. You will also need to consider whether you are covered in respect of any risks to visitors to your property and therefore consider whether you are adequately covered for public liability insurance. Similarly, if you use your vehicle for business purposes you will need to upgrade your level of insurance to include this, particularly if you will be travelling to different places for your work. Bear in mind that if you have valuable equipment at your home as a result of using it as a workplace, this may fall outside the scope of your home and contents insurance. You should speak to an insurance broker as to the appropriate levels of cover.
Q6 We are an online business but our HQ & servers are based in an area that is susceptible to flooding. Do we have to declare this to new and existing clients? It sometimes happens but hasn't for years.
You must be careful not to misrepresent the reliability of the service you are offering. You should assess whether the risk of flooding is reasonably foreseeable and be honest with any existing, new or prospective clients as to any difficulties you may have experienced previously. It may be worth considering (if possible) whether the risk is great enough that moving your HQ and servers would impact less on your business in this respect. In any event, you should look to implement a flood plan and what will happen in if your business is affected by flooding. The government has issued guidance on this matter, which can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/410606/LIT_5284.pdf
You should also consider updating your terms and conditions of business to include provision for what will happen if an event occurs which is outside of your control and stops your business from providing the goods or services under the contract. These clauses are commonly known as "force majeure" clauses.
Q7 How often should you update your original business plan? Would a Solicitor charge just to look it over?
You should update your business plan regularly and in accordance with your business needs; for some businesses this may be as frequent as at least once a month to review planned estimates for the month against actual figures and performance. It is also advisable to do this whenever circumstances change which may alter the direction your business takes, for example, winning or losing a contract tender. As a minimum, you should look to conduct a thorough overhaul once year.
A solicitor will be able to provide advice to you about the legal decisions which may impact on the growth of your business, for example, renewing a lease of premises, any employment law difficulties, or the best way to contract with third parties to minimise the risk against any claims. Solicitors should set out any costs they may charge for considering your business plan at the outset, and may be able to agree a cap or fixed fee for doing so, although it may be best to speak to your independent financial adviser or accountant in the first instance regarding your business plan.
Q8 I work at home and stream music through my laptop. Do I have to get a PPL licence?
You are likely to need PPL licence if the music is played in public or if it is publicly accessible. PPL do offer a discretionary licence policy for lone workers and home offices, so if this applies to you, PPL will not normally require you to obtain a licence. It is advisable to contact PPL direct to obtain confirmation as to whether your circumstances fall within their discretion.
At Clapham & Collinge we have a dedicated team of expert solicitors who can provide you with all of the necessary information, support and legal advice, in relation to employment law, commercial and business services. Contact us today on 01603 693500 or email us using 'Make an enquiry' form.
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