Week 7: Case Study#1- Problem 7.1
We will examine various types of business organizations to include, among others, sole proprietorships, partnerships, and corporations. Our focus will be on the formation and termination of these different types of businesses, advantages and disadvantages, tax and liability implications, and the ability to raise and utilize additional financial resources dependent upon the business organization form selected.
Case Study
Samantha was a partner with Joe and Tammy in a law firm in Bethlehem, PA. In addition to the three partners, the firm employed one other lawyer (hired as an associate attorney), two paralegals, and one administrative assistant/receptionist. The firm was doing well financially and had a well-written partnership agreement setting forth all of the basic requirements for the partnership including division of profits, management responsibilities, etc. As Christmas 2015 approached, Samantha wanted to earn some extra cash so that she could buy her husband a very special Christmas gift since Christmas Day was also his 30th birthday. She began taking in some additional clients after regular business hours and did not tell anyone else at the firm what she was doing. She paid a friend of hers, who was a part-time paralegal at a different firm, to do the paperwork for these additional clients. Joe went by the office one night because he had accidentally left his cell phone in his desk drawer. He discovered Samantha there with a client with whom he was unfamiliar. The next day he asked Tammy if she knew of this client (she did not) and Joe could find no client file on this person in the firm’s records. Samantha admitted what she had been doing when Joe and Tammy confronted her, but she insisted she could do anything she wanted on her time and especially since she wasn’t using office resources for those additional clients.
Questions:
1. Is Samantha correct? Why or why not?
Week 7: Case Study Discussion #2
You and your best friend, a former DeSales college classmate, have decided to open a business specializing in local youth group sports equipment, uniforms, and memorabilia. As you begin to make your plans, the first thing you have to decide is what form of business organization you will use to actually organize this new business. After lengthy research and discussion, you and your friend have narrowed the list of possibilities down to either (1) a general partnership or (2) a close corporation.
1. DISCUSS WHICH BUSINESS ORGANIZATIONAL FORM YOU WOULD PICK AND THE REASONS WHY.
Case Study WRITTEN ASSIGNMENT #3 – WEEK 7
Having graduated from college with a degree in Business Administration, you decide to open a frozen ice/ice cream/custard stand in Lower Macungie Township. After researching various forms of business organizations commonly used to start up such a business, you decide that franchising might be a better way to go. A new national chain of frozen treat refreshment stands – TasteeFreeze – has been very successful in the Philadelphia area and several have begun to open in the Lehigh Valley. Several of your relatives want to know why you are seriously considering a franchise with TasteeFreeze.
Question
1) For EACH of the following business/legal topics, fully explain what legal arguments you would use to persuade your relatives that you feel you are doing the right thing by considering a franchise for your new business:
a) Advantages and disadvantages of a franchise.
b) What you researched about the franchisor (headquarters) before you made your final decision to apply for a franchise.
c) Issues concerning the possible location/territory for your franchise.
d) The types of fees you might be expected to pay to the franchisor’s headquarters when operating your franchise.
e) Typical kinds of lawsuits that arise between franchisors and franchisees.