Legal Strategies in Business Plans

Writing a Business Plan these days is tough, venture capitalists are busy and there are so many ideas to choose from. Bankers want a tight, sweet and to the point business plan. Family Members who may lend you money are generally worrisome due to lawsuits and liability. This is why you need to pay particular attention to the Legal Section of your Business Plan.

Below is a sample legal section of a business plan written for a mobile car wash company, which is part of a franchise system. Now that is a truly simple business, but it serves also as a very good sample in that it is easy to follow. I recommend that you print this article and make notes in the margins about your own business concept and then modify this sample to fit your business. In doing so you can create a strategic plan and legal strategy, which can protect your assets and put your investors at ease.

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LEGAL STRATEGIES:

Licensing

All city and county licenses will be acquired and paid for by the franchisor as part of our turn-key franchise package. This will include:

City Business License

County Permits

Fictitious Business Name Statement

Home Occupation Permit

Soliciting Permit (If Applicable)

Regulations

There are presently some state requirements for discharging water into storm drains. These regulations are locally regulated and mandated as part of the Federal Clean Water Act. These regulations are now administered by California’s Regional Water Quality Control Boards. They can be viewed in the California Water Code books under sections 13.260.1-13.263.4. Although cities cannot enforce the California Water Code, they can deny a business license application or a home occupation permit. Many counties have adopted “Best Management Practices” for wastewater run-off. Usually counties have chosen not to try to regulate mobile car washers or mobile detailers because they use biodegradable products, which are harmless to the environment and they are considered non-point source discharges. Nevertheless, some agencies feel it is in their power to protect themselves by simply denying everything that has a discharge.

The Car Wash Guys have received the only letter of exemption to section 13.260 of the California Water Code from the chairman of a regional board. This was a major accomplishment for the founder of Car Wash Guys International, Inc. after a three year legal battle started in 1990.

Insurance

As specified in the Franchise Offering Circular, we must maintain certain insurance policies. The standards and specifications of these policies are set forth in our borrowed copy of the confidential operations manual. These policies include the following limits of liability and comprehensive coverages:

1) Comprehensive General Liability Insurance in the amount of $1,000,000 bodily injury per occurrence and $500,000 property damage

2) Vehicle Insurance in the amount of $1,000,000 single limit, including comprehensive and collision

3) Worker’s Compensation and Employer’s Liability Insurance

4) Equipment Insurance for the value of all The Car Wash Guys equipment

Our franchisor will help us secure this insurance and will make the initial monthly payment to start the policies. As per our Franchise Agreement, our franchisor will be named as additionally insured.

We expect to pay between $250.00-$500.00 per month for this coverage the first year. We don’t expect any claims so our insurance will drastically be reduced at the end of our first year. Claims in our industry are very rare.

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