Golden Handshake: Retaining Key People as Your Business Evolves
Multi-unit franchise owners continue to experience growth. As we have discussed in previous articles, one of the keys to developing sustainable growth is DUPLICATION of successful strategies. Another key to growth is the ability to scale effectively which boils down to process, procedures, and PEOPLE.
People are one of the most valuable assets to any business. As the business changes, ensuring you have the right people on your team safeguards your ability to be flexible and rise to the occasion. A friend of ours, Michael Einbinder an attorney with Einbinder & Dunn shares his legal perspective:
When working with clients on devising a succession plan, one of the most critical issues is retaining and motivating talented executives and managers. The last thing a company in transition needs is to have its top talent leave the company as it considers or implements its growth and succession strategies. In the succession planning phase, which is frequently a time of stress for employees concerned about a possible restructuring of a business, it will be helpful to take steps to ensure that these people stay with the company. One way to do that is an employment contract that assures employment at agreed-upon compensation for a significant time. Such agreements often contain a provision referred to as a “golden handshake” that provides a severance package if an executive loses their job due to changes in the company. Employment agreements can also include equity grants with vesting periods that reward important personnel with an ownership interest in the business over time as it goes through and proceeds with a restructuring.
Businesses contemplating a change in control or restructuring should also ensure they have documents requiring employees to maintain the confidentiality of proprietary information and trade secrets. Similarly, companies may want to ensure that non-compete agreements bind top talent, so they don’t lose such employees to competitors. The law is changing concerning trade secrets, and non-competes and businesses should consult counsel to ensure that documents are updated.
The only thing that is constant is change. Ensure your multi-unit franchise business, personal financial goals, and vision for your business and family can be achieved and protected when adjusting to change in our environments.
The pandemic has taught all business owners that it is better to prepare for the “what if’s” before they become reality, which we refer to the possible, probable, and potential changes impacting your vision. We encourage business owners to look at planning through the lens of “change.” If you or your business experience any change, whether expected or not, strategies based upon specific scenarios can set you up for better success to be agile when change comes.
Check out the other articles focused on Multi-Unit Franchisee Growth:
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Business structures and agreements have a direct impact on areas such as, but not limited to, taxation, ownership control, shareholder access to cash flow, and family governance. Agreements preclude disagreements. Click the following links for more drill-down resources on Business Structuring.