Leases should allow either party to terminate the lease obligation if circumstances change. For example, it may be appropriate for a tenant to have the right to terminate the lease if the building is sold to a buyer outside the family. Similarly, it may be appropriate to grant the lessee a right of pre-emption where the object of the hire (e.g. B building or equipment) is sold to a buyer outside the family. If the owners have personally secured debts of the business, any person may be exposed to a disproportionate loss under their guarantee, unless the owners enter into a repayment agreement with the business and contribution agreements between them. This is especially important for an owner who leaves the property but has not been released as a guarantor. While it is generally desirable to include alternative dispute resolution provisions in all family business agreements, an arbitration clause in an employment contract may not be applicable in some states. Family members who have chosen to work for the family business on an essential basis can expect that their employment status in the business and their remuneration will not be affected by the ownership succession, but if they do not have an employment contract, they may run the risk of being treated as an employee after authorization who can be terminated. degraded or geographically ousted by a board of directors or a new management. 1. [Establish an exhaustive list of succession priorities (missions and objectives)] The first step in the development of a succession agreement is to fully involve all interested parties.
It`s not just the entrepreneur`s son and brother that needs to be evaluated on the owner`s intention to retire, it`s all the key management and even the clients. In addition, it is even better to involve all parties involved before the owner is immediately retired. This way, there is a buy-in on the plan well in advance of the owner`s departure date and the company has the chance to make a smoother transition to new owners. When planning the succession of family businesses, it is important to take into account contracts with relatives. Where a person related to the owners makes goods or services available to the family business, this relationship must be formalized in a written contract, to the extent that the owners wish this relationship to continue after the transition of the business to successors. Take the following examples: among the candidates who will succeed him are qualified employees who are ready to take on the necessary roles. Most succession plans contain two to three candidates for each role. In this way, if one of them decides to leave or move the company, there is no need to restart the process. Instead, the company can simply move the list to the next candidate down. Owners who act as directors and senior officers or managers of the enterprise should be protected from liability for their services for acts committed in good faith. Normally, these provisions appear in the articles, statutes or company agreements of an enterprise.
These should be formulated in such a way as to cover the protection of directors and senior managers who no longer perform this function. If these directors are covered by directors` and officers` insurance, either directly or as a means of financing compensation, the coverage should include former agents. Where one of the family businesses provides services to other family businesses owned by different owners or owners but in different shares, the businesses should perform a service contract to ensure that the service relationship is fair and continues on similar terms. For example, if the family owns a real estate portfolio, with each property located in another LLC and the real estate being managed by a separate management company, also owned by the family, service agreements help the management company have a cash flow it needs to reimburse employees and other operating expenses. . . .