You are a lawyer representing small business owners in Washington state. A new client, Sally, has contacted you for help regarding her new business plan, Stars Mobile. Stars Mobile is a food truck company that provides catering at outdoor venues. The cooks and servers would wear costumes and impersonate famous movie stars such as Elvis Presley and Marilyn Monroe while performing catering services. Sally estimates that her new company will hire 40-60 part-time employees and have annual revenues of $500,000. It will operate in Seattle only.
Sally is currently a top salesperson at a catering company called Starz Service that serves customers throughout the greater Puget Sound Area. Starz Service provides their catering services at indoor venues only. Starz Service’s best customers requested catering services that incorporated some entertainment, which is where Sally got the idea for Star Trucks. Sally is confident that these customers would hire Starz Trucks for their outdoor catering needs. Sally signed a non-compete agreement with Starz Service which restricted Sally’s ability to directly solicit and/or provide catering services to any Starz Service customer during her employment and for 1 year after her employment with Star Service ended.
Sally is seeking advice on the following questions.
1. What are the pros and cons of the different corporate entities Sally can use to incorporate her business? What corporate entity do you recommend, and why?
2. What factors should Sally consider when evaluating the terms of her non-compete agreement with Starz Service? In your opinion, how likely would it be that Starz Service’s non-compete agreement would be enforceable against Sally? Why?
3. Sally is nervous about starting her food truck catering company because of the potential liability. What types of potential liabilities or claims can you advise Sally to take precaution from with customers and employees?
4. Do you see any intellectual property issues that you can advise Sally on? If so, please explain.
5. Are there any other issues you would raise with Sally?