Articles Posted in FFL Formation

I have been getting a lot of questions regarding setting up a FFL. While we help many people setup proper FFL’s, once it your FFL is set up you may consider joining FFLGuard as they have many benefits for their members. Here is an overview of their services:

FFLGuard is an innovative legal services program offered by firearms-trained attorneys, The Chiafullo Group, LLP, where the group acts as National Coordinating Counsel to participating clients. The FFLGuard program is designed to provide participating Federal Firearms Licensees with cost-efficient access to legal professionals, including firearms lawyers, subject matter experts and other qualified personnel (some of whom are former ATF employees), to deliver educational training and rapid response services, with a focus on safeguarding the viability of the client’s FFL. FFLGuard’s mission is to promote compliance before, during and after ATF inspection, while providing its clients with the tools to be compliant and the attorneys to back them up.

Inconsistency in the ATF’s interpretation of the law leads to mistakes by the dealer, and increases the chance of a FFL losing their license. According to the National Shooting Sports Foundation, sponsors of the SHOT SHOW each year, a single violation, without warning, is enough to have your FFL revoked. Thus, failure to engage firearms savvy counsel like those from FFLGuard to intervene, assess all inspection activity, interface with ATF inspectors and agents throughout the process, and compare actions by ATF to inspections conducted elsewhere, could possibly result in the revocation of your FFL. The industry demands legal compliance services, and participating in FFLGuard is you best chance at keeping you FFL pristine and your business viable. Please visit the FFLGuard website for additional information. www.fflguard.com

We are regularly asked to help people setup their FFL properly. One of the biggest problems with many FFL’s is that they use regular operating agreements or corporate bylaws. There are some specific issues why using a canned or shell company documents may not be appropriate and why you should consider using agreements that are specifically drafted for FFLs.

• If the business entity is used correctly, the business entity can stop the liability from going to the owners and managers. Many corporate and LLC docs can prohibit some of the activities that FFL, their owners, managers, and employees engage in. If you are violating the terms of your agreement, your business entity may not shield you from the actions or liability
• Properly drafted agreements allow for growth including taking on new members or shareholders which could provide additional resources to the business. Today a prohibited person may not know they are prohibited and traditional operating agreement do not shield them from prohibited transactions or activities. Your agreement should help a person determine if they are prohibited as well as guide them in which activities they may and may not participate and who needs to be updated upon such a change.