What You Always Wanted to Know About ROFRs But Were Afraid to Ask

The term ROFR (pronounced “ROH-fur”), or R-O-F-R, is often bandied about by legal professionals, business parties, and courts in connection with business and real estate matters without any additional context or explanation of exactly what it is they are referring to. Before you do an internet search and end up listening to this guy, let me explain what a ROFR is. It’s an acronym for a legal entitlement called a right of first refusal.  While the name itself sounds, and admittedly somewhat is, self-explanatory, a ROFR is much more than merely a right to “refuse” something.

Planning for Success(ion)

My wife and I had our first child late last year. As any new parent quickly discovers, having a baby comes with an impressive list of things to worry about. Some are immediate and often. Is he eating enough and when did he last eat? Why won’t he sleep? Why is he crying? Does he like me? Is having the TV on really that bad for him? 

Others are considerably less immediate, but much more uncomfortable. What happens to him if something happens to me?

The California Non-Compete Myth: What Startup Founders Should Focus on Instead

California's Longstanding Skepticism of Non-Competes

California has long taken a different approach to employee mobility than many other states. As a general rule, agreements that prevent employees from engaging in a lawful profession, trade, or business after leaving employment are unenforceable. For startup founders, this often comes as a surprise.

Shark Tank Deals That Fell Apart: The Importance of Due Diligence After the Handshake

Longtime entreVIEW readers will know that my colleague and fellow author, Dan Tenenbaum, has been an avid fan of “Shark Tank” since at least 2014 when he wrote this post. Fans of the show have seen it dozens (or even hundreds) of times: the entrepreneur and the shark shake hands and agree to a deal on national television. Deal done, right…not even close. 

Reportedly, roughly 40-50% of Shark Tank deals made on camera never actually close. A 2016 Forbes analysis found that 73% of deals from the show’s first seven seasons either fell apart or were renegotiated after filming—only 27% closed on the original terms. 

Purchase Price Escrows vs. Holdbacks, An Overview

Recently, I’ve worked on several business sale transactions where the parties expressed varying preferences as to the use of an escrow account versus a holdback mechanism in the transaction structure, so I thought a brief overview of those two concepts might be something that readers of entreVIEW might find interesting.

In a business sale transaction, the parties typically (but not always) opt to incorporate either an escrow account or holdback mechanism, both of which generally serve the same role in any transaction—the parties agree to set aside a portion of the purchase price that a Buyer can recover against, as needed, after the closing. This could be for purchase price adjustment, often related to

What Every Startup Should Know Before Signing Its First Office Lease

For many early stage companies, signing that first office lease feels like a milestone—tangible proof that the idea is becoming a real business. But commercial leases are not like apartment leases. They’re dense, heavily negotiated contracts drafted to favor the landlord, and mistakes made at this stage can follow your company for years. It is important to consider a few key lease provisions before making a decision that can influence the success of your business. 

From Handshake to Evidence: Bridging the Gap Between Trade Practice and NGFA Rules

Most grain companies run on muscle memory.

Contracts get written, confirmations go out (or should have gone out), trucks roll in, grain gets shipped out, the year marches on... It’s a system held together with an unspoken understanding among everyone involved. 

When something unexpected happens, it usually gets resolved. It always does…until it doesn’t.

The Startup Hunger Games: Survival Tips for Entrepreneurs

In 2025, building a startup feels more like surviving The Hunger Games than building a business. Venture capital has been tight, interest rates are high, and only the most resourceful founders emerge from the arena with funding intact. But the tide may be turning, according to Crunchbase data: global venture funding climbed to $97 billion in Q3 2025, up from $92 billion in Q2 closing up 38% year over year. AI startups dominated, capturing over 46% of total funding, with just eighteen companies securing one-third of all capital deployed. This intense capital concentration favors founders who are disciplined, legally sound, and ready to scale. History backs them: Airbnb, Uber, and Slack were all born in downturns. The entrepreneurs who survive 2025’s volatility are not riding the wave —they are building enduring businesses that will thrive when the market rebounds.

Startup Law 101: 5 Mistakes That Can Blow Up Your Startup – Don’t Sign the “totally fine” ChatGPT Contract

Startups move fast, but legal mistakes move faster—and they hit harder. Whether you’re bootstrapping or backed by big VC, your lawyer isn’t just a formality—they’re your firewall. Too many founders treat legal like an afterthought, then wonder why things explode. From boardroom to courtroom, these are five founder mistakes that separate the bold from the bankrupt. So, before you launch that app, hire that friend, or sign that “totally fine” ChatGPT contract, read this:

1. Don’t Wait Until You’re in “Oh Sh*t” Mode to Call Your Lawyer

In the startup world, things move fast—your legal strategy should move faster. Waiting to bring in counsel until there’s a co-founder fallout, a misfired contract, or a surprise lawsuit is like trying to install brakes after your Tesla hits 90 mph. We’ve seen it all: 

• One founder stops showing up but still owns half the company because no one drafted a real agreement. 
• Someone grabs a one-page operating agreement off Google that leaves you stuck with default state rules that don’t fit your company’s needs. 

A little legal foresight upfront saves hours of cleanup later.

From Commodity Trading to Contract Law: What Entrepreneurs Can Learn About Risk

Before I became a transactional attorney, I was a grain trader. If you’re ever in an airport, you can spot a grain trader rather easily. They will be the person in a polo, grain company brand over their heart, pacing back and forth, trying to get just a little more phone time in before they take off to someplace else. On any given day, I might have fielded a hundred phone calls and reviewed well over a hundred pages of contracts before heading home. The pace was relentless, but what mattered most was precision. If you didn’t know the rules, the actual, technical rules, and understand the “industry rules,” you could expose the company to hundreds of thousands of dollars in losses from a single mistake. The margin for error was zero.

Buy-Sell Provisions: More Than Just an Emergency Plan

Regardless of the type of entity, every business has or should have (more on the should aspect below) a governing document that is at least a basic agreement among its owners that governs (1) the operation of the business and (2) the owners’ contractual rights, obligations, and restrictions with respect to their ownership interests in the business. The second of these contains what are commonly referred to, by lawyers at least, as the “buy-sell” provisions. If for some reason the owners decide not to enter into a written governing document, then the statutory default provisions of the business’s state of formation (which vary from jurisdiction to jurisdiction) automatically govern the entity and the owners. For example, if an owner of a limited liability company is determined to be legally incompetent to manage their affairs and the business either doesn’t have a governing document or that document is silent as to the treatment of an owner’s interest in the event of legal incompetence, what happens? Under Delaware law, the most widely recognized state of formation for businesses, the owner’s personal representative can effectively step into the owner’s shoes as an owner, thereby resulting in a previously unrelated (and likely inexperienced) third party having an active ownership interest in the business.

Updated Resource for Entrepreneurs and their Lawyers

The National Venture Capital Association (NVCA) sets the standards, quite literally, on the forms used by most emerging businesses looking to raise capital. Founded in 1973, the NVCA is a research, advocacy, and professional development network—a non-profit organization supporting the venture capital industry and the various players that make up the community.

Keeping Good Records – An Often Overlooked Element of the Business Exit Plan

With all of the long nights and frantic days that can come with starting and running a business, the practice of keeping paperwork neatly organized can easily fall to the bottom of a to-do list. It is certainly understandable that you might consider time spent networking with potential customers and funding sources to be far more important than making sure your company’s contracts are organized in a logical order; however, having a good handle on your paperwork can be more important than you may think.

If you suddenly find yourself awash with customer demand, you may also soon find yourself across the table from a sophisticated investor that is offering either to invest a large sum of money or, hopefully, to acquire your business for an even more tidy sum. That investor is going to want to conduct its due diligence on your business to ensure it is worth the money. The diligence process can be lengthy and expensive for both the investor and you.

What's the Catch?

As fall starts, so does collegiate sports. I recently sat down to watch one of the numerous Saturday college football games and heard the announcers discussing all the money this year’s collegiates were making through their recently sanctioned ability to use their name, image, and likeness (NIL).

This led me to thinking about how these young entrepreneurs are rapidly building their brands and generating income, but at what cost?

A recent article published by ESPN discussed an NIL deal involving current Chicago Bears rookie Gervon Dexter. Dexter signed an NIL deal with Big League Advance Fund in 2022 while attending the University of Florida. Dexter’s deal provided for Dexter to receive a one-time payment from BLA of $436,485 in 2022 in exchange for 15% of Dexter’s pre-tax NFL earnings for 25 years. For Dexter, this means paying BLA an estimated $1.008 million based on his present NFL contract terms ($6.72M over four years).

Farmers Are the Ultimate Entrepreneurs

Fall is here (although it looks like winter outside at the moment!). This time of year always makes me think of farmers across the upper Midwest harvesting their crops. I consider farmers to be the ultimate entrepreneurs and, generally, some of the smartest and most determined people I have ever met.

Like many entrepreneurs, 2020 has presented a lot of challenges for farmers who, even before this year, were already battling declining profit margins, low commodity pricing and increasingly unpredictable and extreme weather patterns. Farmers are constantly innovating, growing businesses by themselves and taking full responsibility for the success of their products, from seed to harvest. I think entrepreneurs can learn a lot from America’s farmers.

Here are three things entrepreneurs can learn from farmers: 

• Use your mission as motivation. For an entrepreneur to be successful, the entrepreneur better have a mission that matters and motivates them. A farmer’s mission is to produce the world’s food and other essential agricultural products. Farming is essential and fundamental to society. An entrepreneur’s mission should be equally as critical.
• Employ data analytics. Farmers rely on sophisticated data analytics to aid their decision-making, such as what crops to plant and when to plant them, whether to contract in commodity futures and when to sell products. Data allows farmers to evolve and to avoid relying solely on historical practices to dictate future actions. Entrepreneurs should use data to help them innovate with knowledge and confidence, particularly when you’re operating in a high technology environment where things can change rapidly.
• You are only as good as you word. Farming communities are typically small and a farmer’s word means everything.
  Trustworthiness matters and can be a key driver in establishing a positive business reputation, business longevity and key business relationships. Of course, written agreements are relevant and can be important (how could a lawyer like me say anything different). Like farmers, entrepreneurs should value their verbal commitments at least as much as written legal agreements. 

There exists a misconception that farmers and farming are behind the times. Those of us who work with or have been exposed to farmers feel the opposite way. Just like high tech startup entrepreneurs, farmers frequently embrace innovation, work tirelessly and are among the first to take on risk and innovate if there is a potential return. 

USING E-COMMERCE TO SURVIVE COVID-19

Businesses have been forced to close their brick and mortar stores. We are all practicing safe distancing. People are working remotely. COVID-19 has already had a significant impact on how we conduct business. 

While the digital transformation was well underway before COVID-19, the transition to more vigorous and expansive e-commerce has never been more apparent. Amazon was set to hire over 100,000 new employees by April 1. Zoom has replaced all face-to face business meetings. Virtual interactions are the new norm. 

Nearly all companies now use some form of online or mobile websites and social media to promote their businesses, sell goods or services, conduct business transactions, and connect and communicate with customers, clients, or other businesses. 

For businesses that already enjoyed a robust e-commerce presence, now is a good time to review and enhance e-commerce strategies. For those businesses with a limited or non-existent online presence, their very survival may require a fresh look at e-commerce.

Wage and Hour Risks for Small Businesses

While I am not an employment lawyer, it doesn’t stop my entrepreneurial clients from calling with questions in that domain. It also doesn’t stop friends and family members, who assume having the title “Juris Doctor” means you are an expert on all things legal, from calling asking for me to guide them on employment issues — but that’s a topic for another post.

When clients call, I often provide some high-level thoughts on the issues (stuff that I have learned from some awesome colleagues, who actually are experts in HR-related matters) and, if they need more than that, I hand them off to these same colleagues on the 4th floor for more guidance.

Given that I frequently see early-stage entrepreneurs with limited cash resources struggling with employment-related legal issues, I wasn’t surprised that this recent article, titled “This New Kind of Expensive Lawsuit Could Easily Bankrupt Your Small Business,” was about the risks relating to the failure to comply with applicable wage and hour laws.

Keep Control of Your Venture

Every founder I work with is concerned about control. And rightly so, given that their new venture is their baby and the beneficiary of a lot of sweat and money out of their own pockets.

Usually the discussion gets interesting when the company begins issuing shares to employees or raising funds, but sometimes we dig into it right at formation. There are various creative methods to approach the issue.

Some traditional methods include implementation of voting agreements or the like, but for a startup looking to add and retain employees in a competitive market those methods may not be an ideal approach, plus they can be overly complex and it can become a burden making sure every employee signs an agreement that nobody other than legal counsel understands. Another method is to implement a dual-class of shares to give one or more founders the sole vote or “super” voting rights.

Managing the Risks of Your Relationship with Your Business Partners

Starting a business is an exciting time in your life.  Your days are filled with meeting prospective investors and advisors, and you are eager to go live with your new product or service.  But don’t overlook one of the most important decisions during this time: Who will you go into business with, and how can the risks of that relationship be managed?  
  
I’m not going to tell you who is or is not a good business partner.  Instead, I’m going to highlight some issues to which you should give special consideration.

SPIDERMAN TO RESCUE PATENT ROYALTIES?

Each morning as I gargle with Listerine, I am reminded that simple is sometimes best when drafting agreements. 

In 1881, Dr. J. J. Lawrence developed his now-famous antiseptic formula and agreed to make it available to Jordan Lambert. The simple two-sentence agreement used to transfer the Listerine formula reads as follows:

Know all men by these presents, that for and in consideration of the fact, that Dr. J. J. Lawrence of the City of St. Louis Missouri has furnished me with the formula of a medicine called Listerine to be manufactured by me, that I Jordan W. Lambert, also of the City of St. Louis Missouri, hereby agree for myself, my heirs, executors and assigns to pay monthly to the said Dr. J. J. Lawrence his heirs, executors or assigns, the sum of $20.00 for each and every gross of said Listerine hereafter sold by myself, my heirs, my executors or assigns. 

In testimony whereof, I hereunto set my hand and seal, Done at St. Louis, Missouri this the twentieth day of April 1881 Jordan W. Lambert.

Over almost 75 years, more than $22 million in royalties were paid to Dr. Lawrence and his heirs. The formula remained essentially the same. In 1959, Warner Lambert initiated litigation to void the agreement and end the royalty obligations. 

Warner Lambert argued that the formula was no longer a secret and the contract was unclear and indefinite as to duration. The court found in favor of Dr. Lawrence and his heirs: “There is nothing which compels the plaintiff to continue such manufacture and sale. The plain meaning of the language used in the agreement is simply that Lambert’s obligation to pay is co-extensive with the manufacture or sale of Listerine by him and his successors.”

Seventy-five years is fine with trade secret agreements, like the one covering Listerine, but you had better be careful when negotiating an agreement that includes patents. Royalties cannot exceed the 20-year patent term. 

Freedom to contract? Not so with patents. Just ask Peter Scheiber, the inventor of Surround Sound audio technology. Scheiber agreed in a patent license with Dolby to a lower royalty rate that went beyond the patent term. When Scheiber’s patent expired, Dolby stopped paying royalties. Even though the parties agreed to the extended payment period (at the request of Dolby!), the court determined that Dolby was not responsible for royalties after the patent expired. The court relied upon a United States Supreme Court case, Brulotte v. Thys. Co., 379 U.S 29 (1964). In Brulotte, the Supreme Court found that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.”

Brulotte has been viewed by many as discouraging flexible licensing practices. Some have even suggested that this long standing rule has had a negative impact on licensing in the pharma and life sciences industries and is an impediment to new medical treatments being brought to market. 

Though heavily criticized, Brulotte has remained the rule followed for patent licensing for over 50 years. But a recent Supreme Court case may finally put an end to Brulotte. 

On March 31, 2015, the United States Supreme Court heard oral arguments in Kimble v. Marvel Enterprises, 727 F.3d 856,863 (9th Cir. 2013). Stephen Kimble, the inventor of a toy that shoots foam string from a glove, settled a patent dispute with Marvel that resulted in an agreement that provided Kimble royalties for web-blaster products. When the Kimble patent expired in 2010, Marvel—like Dolby—cited Brulotte and stopped making royalty payments to Kimble. The Kimble case has made its way up to the Supremes. 

Will Stephen Kimble suffer the same fate as Peter Scheiber, or will Spiderman prevail and save the poor inventor from lost royalty payments? 

Will parties finally be given the freedom to negotiate and structure payment streams for patents that are relevant and meaningful to the transaction at hand?

Will Brulotte survive the Spiderman challenge? 

Entrepreneurs should stay tuned and pay very close attention to the Supreme Court’s forthcoming decision in Kimble v. Marvel Enterprises, as it may have a significant impact on how they can structure payment provisions in intellectual property agreements. 

Tip: To extend royalty payments, consider a hybrid agreement that includes both patents and trade secrets/know-how. And remember Listerine.