Bus Law Case Study 4 Essay

1618 Words Dec 17th, 2012 7 Pages
Running Head: Case Study #4

Case Study #4
Initial Thread
Jean S. Hamby
BUSI 561
Liberty University

Introduction Betty Wilson has decided to open a coffee shop and is considering various options including franchising, sole proprietorship, joint venture, corporation and partnership. In addition to determining the best legal entity to form, Betty has to decide if she will employ or partner with various friends and family members. Finally, she plans to name the coffee shop The Gathering Place and must determine if the name is available and a good choice. This paper will evaluate the pros and cons of various business options, address the dilemma of whom to hire and determine if The Gathering Place is a viable option for the name
…show more content…
In other words, if a company defaults on any debts, the owner’s personal assets cannot be seized to repay the debts of the organization. Limited Liability Company. A limited liability company (LLC) is a “hybrid corporation-partnership, similar to the Subchapter S corporation but with far fewer restrictions” (Kubasek, et. al, 2012, p. 469). Similar to S Corps the company is taxed as a partnership and the organization’s partners liability is limited. A significant difference between a LLC and a S Corp is that the S Corp has defined requirements that must be met to qualify the business as a S Corp. Amongst those qualifications is the limit to the number of partners who own the S Corp. A LLC has no limit on the number of owners (Owen, 2008). Franchising Another alternative to the various business formations is franchising. In a franchising arrangement the one party (franchisee) sells goods or services trademarked by another party (franchisor). There are marketing and branding advantages to franchising. A franchising arrangement provides the franchisee with access to proven marketing strategies and branding materials. While there are advantages, franchising agreements also have disadvantages. A franchising agreement is a binding contract that defines the responsibilities, including financial obligations of each party. The franchisee may be required to pay royalty fees for a specified period of time. (Nyadzayo, Matanda, Ewing, 2011). This

Related Documents