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Scaling a business is an exciting journey, but without the right legal foundations, growth can quickly expose big problems. From protecting intellectual property to securing favourable investment terms, a solid legal base is essential for long-term success. Many businesses overlook these critical elements in the rush to scale or because they are concerned about the high, uncapped costs often associated with traditional law firms.
Founders Law aims to change that by providing embedded legal support built specifically for founder-led businesses - at a fraction of the usual cost. In this piece, we look to highlight five common hurdles that can slow businesses down - and how to steer clear of them.
Scaling quickly doesn’t have to mean skipping essential legal documents. The first thing your customers, investors, and partners will see about your company is your website, so ensure it is professional and legally compliant. Website terms and conditions are not legally required, but they protect your business by defining how customers interact with your site. f
Privacy and Cookie Policies, however, are a legal necessity to ensure compliance with data regulations like GDPR and PECR. Failure to have updated policies in place can make your company look unsophisticated and, in some cases, can lead to fines.
Your brand is one of your most valuable assets, and securing trademarks ensures its protection. Without evaluating the intellectual property you own and protecting it, competitors can replicate your brand or products, risking your market position.
Consider the case of BrewDog, who faced a legal battle with the Elvis Presley estate over the name of their IPA “Elvis Juice.” BrewDog initially applied for trademarks on “Elvis Juice” and“BrewDog Elvis Juice.” The Presley estate contested using “Elvis,” claiming it infringed on the musician’s name and reputation. Although BrewDog lost the initial ruling, they appealed and eventually secured the trademark for “BrewDogElvis Juice,” though not for “Elvis Juice” alone.
This dispute cost BrewDog a huge amount in legal fees and delayed its launch by many months, highlighting the importance of thorough IP research and protection from the outset. That said, knowing BrewDog, perhaps this was all a ploy to get them in the media—after all, there is no such thing as bad press!
Co-founder disputes are more common than you might think. No one starts a business with partners thinking it will end in a dispute, but it is one of the most frequent circumstances we come across at Founders Law. So often, there is no paperwork in place between the founders and varying ‘interpretations’ about what was agreed. We have even spent hours leafing through WhatsApp conversations and trying to infer a contract.
A comprehensive founders’ agreement can prevent conflicts that inevitably arise as a business grows, particularly as you look to negotiate further shareholder agreements. Ensuring all parties are aligned on equity splits, decision-making processes, and exit strategies can avoid conflict further down the line. Addressing these details up front minimises disruptions as your business scales and relationships evolve. You want to ensure this is done before your company gets any real traction or value. If you fall out with another founder, things can get messy and unpleasant; a document takes the emotion out of a tricky time for all.
Securing funding is a key milestone, but it’s essential to approach it strategically. Missteps such as agreeing to excessive dilution, unfavourable share classes, or granting too many consent rights can limit your control and long-term growth potential. Understanding investor expectations and negotiating terms that align with your goals is crucial to maintaining ownership and flexibility.
As soon as a Term Sheet lands, pick up the phone to a lawyer. Whilst agreeing one is not strictly legally binding, an investor will expect you to stick to it and trying to renegotiate the deal can collapse the investment. It is far better to know and understand what you’re signing upfront and ensure that it is reflected in the main transaction documents.
Expanding into new markets offers exciting opportunities, but it also throws up a whole host of new legal challenges.
Your business is suddenly required to comply with an entirely new set of data protection laws, region-specific employment regulations, and cross-border tax requirements. Each new market you enter into multiplies these risks and requires you to keep ontop of them on an ongoing basis.
We always recommend that our clients seek expert guidance to navigate these regulations and scale internationally with confidence and we’re there to help them every step of the way.
Want to make sure you're prepped and ready to scale? Email Tilly@founders-law.co.uk to set up a call.
