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With all the hard work you put into your cigar business, the last thing you want to deal with is a lawsuit or the threat of getting sued. Not only does litigation threaten the existence of your livelihood, it’s also expensive and unpredictable. Despite every cigar business owner’s best efforts to stay out of court, this is a unique industry with specific challenges and matters do sometimes reach that point. Here’s why.
Reason #1: Challenging Tobacco Laws
The tobacco industry is one of the most regulated in the U.S. There are so many rules, laws, regulations, and ordinances owners have to abide by that they can place a significant burden on the business. If they run afoul, whether because the rules changed too quickly or were confusing, or because the cost of compliance would have been too steep, the owners of a cigar business might find themselves in court.
In some cases, going to court to challenge an unclear or unduly burdensome rule is the only effective solution. A few years ago, for example, when the FDA attempted to require warning labels for cigars, the regulation was challenged in U.S. District Court, which vacated it. While the plaintiff in that case was the Cigar Association of America, numerous cigar businesses no doubt had indirect involvement in the litigation and would have stepped up as potential plaintiffs if necessary.
Reason #2: Inadequate Contracts
Contracts are an important part of any business, and when they’re poorly worded or the parties to the contracts don’t carefully review them, litigation further down the road is almost inevitable.
For instance, a tobacco farmer who enters into a crop production contract could find themselves in court if there’s confusion over the quality control provisions. If the cigar manufacturer and tobacco farmer disagree on whether a particular crop meets the manufacturer’s quality requirements, a lawsuit is possible.
Reason #3: Little to No Succession Planning
If your cigar business is like most others, it’s owned and operated by a single person or a small number of family members or friends. What happens if the owner (or one of the owners) leaves the business? Whether it’s because they want to retire or they pass away, not having a thought-out business succession plan is asking for trouble.
Conflict can arise over who takes over for the departed owner. If the heirs to a deceased owner want to cash out their interests in the business but the remaining owners don’t have the funds to buy them out, matters can become contentious. Disagreements or misunderstandings that can’t be resolved among the interested parties are likely to culminate in litigation.
The best way for your cigar business to deal with lawsuits is to avoid them as much as you can. But in some cases, going to court is your best option. To learn more about how Venerable Law can help you avoid litigation as much as possible, set up a free consultation by calling 813-680-4530.
