Test

Lou and Jose want to open a sports bar and restaurant, but do not have the funds to get the business started. Lou and Jose confide in a third party investor, Miriam, who will provide the capital to begin the operation of the bar and grill. Miriam, however, does not want to be a participant in running the business, but wants a percentage of the ownership. Miriam’s sole interest in the business is a financial investment. This type of investment would allow Miriam to be in a limited partnership with Lou and Jose. A limited partnership includes members of a company who invest capital but are not required to participate in management or the operating tasks of the business. Limited partners also have no personal liability to the partnership debts beyond the capital that was originally invested in the company. Once Lou, Jose, and Miriam decide that the three of them will be in a limited liability limited partnership then they will have to make the decision of which business entity will best suit their restaurant. Although Lou and Jose do not make a capital investment in the restaurant a limited liability corporation (LLC) would be the best business entity for them to choose. A limited liability corporation would allow all three partners to not be held personally liable for the debts of the business. A restaurant comes with a lot of risks and potential lawsuits from customers. For example, a customer could slip and fall and sue the restaurant, or a customer could get food poisoning and sue the restaurant. In these cases Lou, Jose, and Miriam would all be protected from losing his or her personal assets because the restaurant is a limited liability corporation (Cheeseman, 2010).

A franchise, on the other hand, involves owning multiple businesses in different locations. Frank is a wealthy investor who plans to open a chain of exterminating businesses across the United States. In order for Frank to fulfill his own wishes, he must obtain a franchise license from...