Fracnhising

Shawn Pierre

BUSI 561

The Legal Environment of Business

Case Study 4

Betty is thinking about opening a Christian coffeehouse in Belmont, NC with the help of her husband, family and friend. Betty has considered operating the business as a franchise, a sole proprietorship, a partnership of some sort, a corporation of some sort, as an LLC. Or even as a joint venture. She is thinking of calling the business “The Gathering Place”.

Franchising is a commercial agreement between a party that owns a trade name or trademark (the franchisor) and a party that sells or distributes well and services using that trade name or trademark. (Kubasek, Brennan, Browne, 2012, P.437) Owning a franchise maybe a good idea for Betty she can buy into an established franchise and already have loyalty customers. She would be able to have marketing help for her new business. Betty would establish a relationship with her franchise supplier so she can order all of her franchise needs. She would be in business for herself but not by herself. Betty would help with training and management for all employees. The disadvantages with franchising Betty may have to pay a very large initial cost, often more than what it would cost to start your own business. As long as you franchise she would have a percentage to pay every month. (Hansen S. Randall, Quintessential Careers).

Sole Proprietorships is a business owned by one person who has a sole control over management and profit. Betty can defiantly start her own Christian coffeehouse get a SBA loan hire her own employees and have full control on what will go own at her coffeehouse. They are pros and cons when being a sole proprietorship:

PROS: Only one individual involved, Total control belongs to one, Sole Proprietorship are subject to less government reputation at all levels.

CONS: Personal liability for almost all assets, both personal and business, individual pays all taxes on profit made by business. Ownership cannot be transferred....