Bus Law

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Sole/Individual Proprietorship

Back 1

Form of business ownership in which one individual owns the business

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Advantages of Sole Proprietorship

Back 2

1. Not require to expend resources on organizational fees

2. Controls all the decisions and receives all profits

3. Net earning are not subject to corporate income taxes but are taxed only as personal income

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Disadvantages of Sole Proprietorship

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1.Subject to unlimited personal liability of rthe debts of the business and cannot limit this risk

2. Investment capital in the business is limited by the resoucres of the sole proprietor

3. Authority to make contracts terminates on the death of the owner

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Partnership

Back 4

Involves the pooling of capital resources and the business or professional talents of two or more individuals whose goal is making a profit

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Limited Liability Partnership

Back 5

Partnership in which at least one partner has a liability limited to the loss of the capital contribution made to the partnership

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Limited Liability Company

Back 6

Businesses that allow tax treatment as a partnership with limited liability for the owners

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Advantages of Partnership

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Allows individuals to pool resources and then initiate and conduct their business without the requirement of a formal organizational structure

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Disadvantages of Partnership

Back 8

Unlimited personal liability of each partner and the uncertain duration of the business because the partnership is dissolved by the death of one partner

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Corporations

Back 9

Artificial being created by government grant, which for many purposes is treated as a natural person

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State statues require a corporate structure consisting of what?

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Shareholders, directors, and officers

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Advantages of Corporations

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Shareholder's risk of loss from the business is limited to the amount of capital she invested in the business or paid for shares

Free transferability

Capable of owning property, contracting, suing, and being sued in its own name

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Disadvantages of Corporations

Back 12

Required to pay corporate income taxes and shareholders are required to pay personal income taxes on the amount received when they receive a distribution of profits from the corporation=double taxation

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Joint Ventures

Back 13

Relationship in which two or more persons or firms combine their labor or property for a single undertaking and share profits and losses equally unless otherwise agreed

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Unincorporated Association

Back 14

Combination of two or more persons for the furtherance of a common nonprofit purpose

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Authority of an unincorporated association over its members is governed by what?

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Ordinary contract law

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Cooperative

Back 16

Group of two or more persons or enterprises that acts through a common agent with respect to a common objective (buying or selling)

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Franchising

Back 17

Method of doing business

Front 18

Franchising relies on what to set forth the rights and obligations of the parties?

Back 18

Contract law

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Franchise

Back 19

1. "an arrangement in which the owner of a trademark, trade name, or copyright licenses others, under specified conditions or limitations, to use the trademark, trade name, or copyright in purveying goods or services"

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Franchisor

Back 20

Party granting the franchise

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Franchisee

Back 21

Person to whom the franchise is granted

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Types of Franchises

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1. Manufacturing/Processing Franchise
2. Service Franchise
3. Distribution Franchise

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Manufacturing Franchise

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Franchisor grants the franchisee authority to manufacture and sell products under the trademark of the franchisor

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Service Franchise

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Franchisee renders a service to customers under the terms or a franchise agreement

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Distribution Franchise

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Franchisor's products are sold to a franchisee who resells to customers in a geographical area

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Arms-Length Relationship

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Relationship between two independent contractors such as franchisor and franchisee

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Franchise Agreement

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Contract existing between franchisor and franchisee

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Trademark

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Mark that identifies a product

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Trade Name

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Name under which a business carried on and, if fictitious, must be registered

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Trade Dress

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Product's total image including its overall packaging look

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Trade Secret

Back 31

Formula, device, or compilation of information that is used in one's business and is of such a nature that it provides an advantage over competitors who do not have the information

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Franchise Disclosure Rule

Back 32

Requires franchisors to give prospective franchisees a full disclosure statement 10 days before a franchisee signs a contract or pays any money for a franchise