ACE columnist Carrie Green Yardley offers guidance on how to navigate regulations in different states.
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Q: I’d like to expand sales into the rest of New England. My product is highly regulated, so I know I’ll be dealing with new regulatory agencies in each state. Are there other legal issues I should consider?
ACE advises: Barriers to entry are obstacles that new and expanding businesses may encounter as they try to enter a market or expand market share. These barriers can take many forms, including laws, regulations, proprietary interests, licensing requirements and exclusivity arrangements up and down the supply and distribution chain.
Legal barriers to entry include:
1. Licensing laws may require businesses to obtain a license or permit to operate. Sometimes a business may require several licenses, and you need to know what they are. For example, if you prepare food in a licensed facility, you may still need separate state and local licenses to sell it.
2. Zoning may restrict where businesses can operate and may make it difficult to find a location. Fortunately, most municipal zoning officials are accessible, and can help you understand how to navigate the zoning map and the process for obtaining waivers.
3. Proprietary protections, such as patents, trademarks and tradenames, can make it difficult for new businesses to enter a market by creating barriers to the use of certain technologies or brand names. Infringement penalties can be high. Overcoming this obstacle requires research into data bases at both the federal and state level, starting with your state’s secretary of state, and including the U.S. Patent and Trademark Office. Patents, in particular, require expert assistance.
4. Exclusivity arrangements may limit your ability to penetrate a particular market. If you plan to open a yarn store catering to high-end buyers, you may find that a local shop already has exclusive rights to distribute a brand within your geographic area. This may mean that you need to locate your business outside of that area, possibly in an area with fewer of your ideal customers.
Good luck with the expansion!
Carrie Green Yardley, an ACE vice president, founded Yardley Esq. PLLC in 2015 after 17 years in commercial litigation. The firm works with small businesses and owners on transactions, from startup to exit. She can be reached at carrie@yardleyesq.com.
