Multi-Unit Franchisee Magazine Issue II, 2013 | Page 64

Protect Your Assets!

“For me, the issue is one of
protecting the equity that has
built up in the business against
unforeseen risks, and particularly
uninsured risks.” —Aziz Hashim
I’ll pay you what I owe you.’ I’ll sign for
that $50,000, but not for 10 years and
$500,000. We try to mitigate the onerous,
penalty side of this with landlords too.”
There was a time, he says, 2006 to
2008, where a franchisee could borrow
money without this, but not so much
today. “In many cases you have to offer
personal guarantees,” Robins says.

Aziz Hashim

Additional considerations

A quick checklist of other aspects of
asset protection include the following:
• Employment Practice Liability
Insurance (EPLI). “It’s very expensive
for me to maintain, but I’ve decided it’s
worth it for me to have,” says Simon.
“That’s another risk decision I’ve made.
It protects me from something that could
devastate my business.”
• Payroll. “We still use paychecks,
not payroll in-house because they’re
experts at dealing with those things; and
if they make a mistake it’s their responsibility,” says Simon. “It’s another cost
to the company, and probably cheaper
in-house, but having the extra guarantee and peace of mind from the payroll
company is worth it for us.”
• Uncle Sam. Then there are those
external threats that you can’t prevent
or prepare for. “The government can
always come in and turn your business
upside down,” says Simon. “They have
the power to force you out of existence
if they want.” Taxes—payroll, income,
and sales—can be a real killer. “We do
the best we can to be accurate and provide audit proof,” he says.
• Employees. When it comes to employees, put it in writing, follow through
on the policies, and document employee
behavior and your response.
“We have written policies for sexual
harassment, discrimination, etc.,” says
Robins. When you hear something, start
a formal investigation, he says. “We have

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Multi-Unit Franchisee Is s ue II, 2013

a 12-step process, with lots of documentation. We take it seriously, and follow
the guidelines on how to handle it.”
Simon also has extensive policy and
procedure manuals. “We’re very careful
and have people who deal with this every
day—and we carry that EPL insurance,
which is not something everybody has.
It’s an expensive way to know what your
downside is on one of these claims, because it’s unlikely it would come to a very
large case or settlement with the EEOC.
But if it did, they could charge you huge
fines, potentially triple damages.”
It could be a legitimate case, or one
you couldn’t make go away, and a jury
verdict could have a devastating effect.
“EPL is the only thing that will cover
that,” he says.
“I buy a lot of insurance, and it protects me against the really large losses,”

he adds. He also works to keep his premiums down by not making small claims
with h