Cleveland Business & Commercial Law Blog

It often takes many people to help run a successful business. Typically, companies create boards with shareholders that can have at least some say in how certain operations within the company take place. However, it is not uncommon for shareholder disputes to take place when one or more shareholders become disgruntled with how the business is running.

Ohio residents may be interested in a lawsuit involving Papa John's pizza. Reports indicated that the pizza chain's founder and largest shareholder John Schnatter has filed a lawsuit against the company, including the board of directors and the CEO. Schnatter was previously the chairman of the board, but after making a controversial statement, he removed himself from the position. However, he now wants reinstated and claims that his statement was taken out of context.

Starting a small business in Ohio means making many decisions before the first transaction is ever made. One of the first decisions may be the type of business organization to use that will be most appropriate for the goals of the entrepreneurs. Many just starting out find that partnering with several people is a good way of sharing the expense of business startup and operations. This is why about 90 percent of all U.S. businesses are closely held.

A closely held, or close corporation, is a private business in which a limited number of people hold all the shares in the business. These shareholders are often the same people who own and run the business, and they are typically family members. A closely held business is so called because the shares of the company are held close to the business and are never sold to the public. Any shareholder who wants to sell stock must do so within the group of existing shareholders.

In recent years, consumers in Ohio and across the country have seen more retail giants facing bankruptcy or closing stores. For many, this drastic measure is the result of an inability to compete with e-commerce retailers like Amazon. Those companies that were unable to translate their brick-and-mortar success into an online trade struggled to remain relevant as consumers embraced online shopping. However, more small businesses are finding it beneficial to include an e-commerce component in their business planning.

More than half of small business owners surveyed say the shift toward e-commerce is not something that worries them. In fact, only a small percentage say they are in competition with large e-commerce retailers like Amazon or Walmart. For many small businesses, rather than struggling to convert to e-commerce, online business transactions are actually helping them to expand their clientele in a way they would not have done otherwise.

Better ingredients may make better pizza, but they don't always make better business. When the brand of a company is tied to the identity of the founder and CEO, it may be difficult to salvage the reputation of the product if the founder's own reputation is in trouble. Ohio fans of Papa John's pizza may be following the shareholder disputes that could affect the future of the chain.

The founder of the pizza company, John Schnatter, recently resigned under a cloud when news leaked that he had used a racial slur during a recent conference call. Schnatter says he resigned because the company's heavy-handed treatment of him gave him no choice. In fact, he explained that he had used the offensive word but only explaining that one of his competitors had used it. Schnatter insists he never used the word as a racial epithet and never would, and that he regrets giving in to pressure to resign.