218 Chapter 20

Advantages of a partnership

Creation is easy Income of business is personal income Business losses can be deducted from taxes

Advantages of a sole proprietorship

Creation is easy Proprietor is in total control of management Proprietor keeps all profits

Disadvantages of a partnership

Each partner has personal liability for all losses, including those of another partner (in most cases)

Advantages of a Franchise

Help from the franchisor in starting the franchise Instant recognition due to the franchisor's strong trademark or trade name Benefits from the franchisor's world-wide advertising

Disadvantages of a sole proprietorship

Proprietor has personal liability for all losses Funding is limited to personal funds and loans

Cousins subs system v. Michael R . Mckinney

Subshops Verbally promised help with advertising and other things Not written Read your contracts

Manager-managed LLC

The members select a group of managers to manage the affairs of the company

Franchisor

The owner of the trade name or trademark in a franchise

General partnership

The partners divide profits and management responsibility and share unlimited personal liability for the partnership's debts

Franchisee

The seller of goods or services under a trade name or trademark in a franchise

Sole proprietor

The single person at the head of a sole proprietorship

Unincorporated cooperatives

Treated like partnerships... joint liability and

Qualification

When LLC's register in every state that they ant to business in

Franchise

A business arrangement between an owner of a trade name or trademark and a person who sells goods or services under the trade name or trademark

Sole Proprietorship

A business in which one person (sole proprietor) is in control of the management and profits

Business trust

A business organization governed by a group of trustees, who operate the trust for beneficiaries

Franchise agreement

A contract whereby a company grants permission to another entity to use the franchisor's name, trademark, or copyright in the operation of a business and associated sale of goods in return for payment

S corporation

A corporation that enjoys the same tax status of a partnership Cant have more than 100 shareholders

Corporation

A legal entity formed by issuing stock to investors, who are the owners of the corporation A separate legal entity

Joint stock company

A partnership agreement in which company members hold transferable shares while all the goods of the company are held in the names of the partners Mix of a partnership and a corporation

Limited Liability partnership (LLP)

A partnership in which all the partners assume liability for any partner's professional malpractice to the extent of the partnership's assets

Beneficiary

A person who can expect to benefit from a relationship

Trustee

A person who operates a trust for beneficiaries in a business trust

Chain-style business operation

A type of franchise in which the franchise operates under the franchisor's business name and is required to follow the franchisor's standards and methods of business operations

Distributorship

A type of franchise in which the franchisor manufactures a product and licenses a dealer to sell the product in an exclusive territory

Manufacturing arrangement

A type of franchise in which the franchisor provides the franchisee with a formula or necessary ingredient to manufacture a product

Partnership

A voluntary association between two or more people who co-own a business for profit

Member-managed LLC

All members participate in in management with decisions in the ordinary course of business activities made by majority vote

Limited Partnerships (LP)

An agreement between at least one general partner and at least one limited partner in which the general partners assume all liability for the partnership's debts and the limited partners assume no liability beyond their originally invested capital

Joint Venture

An association between two or more parties wherein the parties share profits and management responsibilities with respect to a specific project

Syndicate

An investment group that comes together for the explicit purpose of financing a specific large project

Cooperative

An organization formed by individuals to market products. Individuals in a cooperative pool their resources together to gain an advantage in the market.

Limited liability company (LLC)

An unincorporated business that is taxed like a partnership, with the members paying personal income taxes, and has the limited liability of a corporation Combines the most advantageous features of partnerships and corporations.

Colette Bohatch v. Butler & Binion

Belief that partners should be allowed to choose their partners

Shareholders

Investors in a corporation, who own the corporation

Kenneth R. Parker v. Concelia Parker

Joint venture lottery ticket case No written agreement is required to form a joint venture

Incorporated cooperatives

Limited liability like a corporation

Mary Kay Inc v Janet Isbell

Mary Kay franchise case She was not a franchise

Disadvantages of a franchise

Must meet the franchisor's standards or risk losing the franchise Has little to no creative control over the business