Business Entities & Corporations

Drew wants to buy Tasty Subs, a national franchise.

1. In bullet point form, list the information that Tasty Subs is legally required to provide Drew if he decides to buy the franchise (do not rely on the list in the textbook; go to the link provided on the Overview page).

• The first thing that he need to understand is the fact that franchises always have the ability of offering independence to small business organization with the main objective of supporting some of the benefits that larger business organizations have
• It is important to keep in mind that it is not important to have business experiences in order to be in the position of running a franchise. The reason for that is because the majority of the franchisers always thrive through offering various trainings that are required for the purpose of operating the models of their business (International 141).
• As compared to start-up business organizations, the truth is that franchise business has been noted to have higher rates of returns to its owners.
• It is possible to secure finances for franchises. The reason for that is because they always require little amount of money to purchase them as compared to freshly started business organizations.

2. If you were Drew, what three items would you find most valuable in determining whether to buy a Tasty Subs franchise? Why? (Note: there isn't a right or wrong answer for part 2 but you needto use your critical thinking skills.)

• Neutral arena
• The presence of flexible law that have the ability of favoring business management
• The presence of efficient court ruling chancery

Question #2 (5 points):

Accord Inc. is a small company run by Ashley and Warner. They and eight of their friends are the shareholders. Accord has run into difficulties with its creditors and is considering bankruptcy. The creditors sue before the bankruptcy can be filed.

1. What will the creditors ask the court to do in order to hold the shareholders personally liable (i.e. the specific legal term)?

• The name and address of each individual
• Their place of residence
• The percentage of their contributions

 

2. Identify and explain each the four areas that could lead to the shareholders being personally liable for the debts.

• The importance of piercing the corporate veil for the entity that provided goods or services to you.
• The corporate liability for the organization when it comes to the need of separating business distinction from others who are not eligible for debts
• Determining the directors or the members of the main organization who can qualify for debts.
• The general effects of piercing the shareholders of the company so as to be in the position or liable for paying the debts their organization might have received (McKnew et al 54).

Note that the legal concept for this question is pertinent to both corporations and LLCs. As such, it is discussed in both Ch. 20 and Ch. 21. Use the material in Ch. 20 to answer this question. Also, note that this question is not about bankruptcy law.

 

Question #3 (5 points):

Mel recently received a promotion to Chief Marketing Officer for Old Fashioned Watches, Inc. Sales have been suffering, so off the bat, he approves an edgy multi-million dollar marketing campaign that appeals to the Millennial demographic, which is not Old Fashioned's historic target consumer group. With this in mind, explain:

1. The business judgment rule – the significance of this rule is to ensure that it has protected its members from various frivolous allegations concerning the manner in which business organizations have to be conducted. It, therefore, implies that some of the judgments that a business will have can also be exempted for the purpose of ensuring that the entity is operated legally. On the other hand, in case the business is perceived to be incapable of meeting legal requirements, its members could have ultimately violated the main business ethics.
2. Its two duties;

• Complying with legal requirement
• Meeting the safety and ethical standards of the business
• Meeting the legal or modern approved business marketing campagns
• Ensuring that each individual is fully responsible for the mandates of the business

3. The four ways (from the textbook) that the rule is applied, and

• Ensuring that the business and its associated members are fully eligible for any mistakes that might made by the business
• Ensuring that is members is legally proven to run the business
• Ensuring that the business is legally registered
• Ensuring that the business is meant to benefit all members (Klarfeld 228).

4. How it will positively impact Mel in this and other business decisions as CMO (i.e. how it will have a positive influence Mel's decision making).

Conversely, it is important to understand that franchise business has a well established image and reputation, continued and easy access to advertising, proven business management, and ongoing support.

 

 

 

 

                                                            Work cited

International, Business P. U. Peru Investment and Business Guide: Strategic and Practical Information. Place of publication not identified: Intl Business Pubns Usa, 2015. Print.

McKnew, Natalma M, and David A. Beyer. Annual Franchise and Distribution Law Developments, 2008. Chicago, Ill: ABA Forum on Franchising, 2008. Print.

Klarfeld, Peter J. Covenants against Competition in Franchise Agreements. Chicago, Ill.: Forum on Franchising, American Bar Association, 2002. Print.