Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ChapterChapter7 Select a Type of Ownership 7.1 Decide to Purchase, Join, or Start a Business 7.2 Choose a Legal Form of Business 7.3 Legal Issues and Business Ownership

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 2 Lesson 7.1 Decide to Purchase, Join, or Start a Business Goals List advantages and disadvantages of purchasing an existing business. Describe how to evaluate a franchise opportunity.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 3 List advantages and disadvantages of starting a new business. List advantages and disadvantages of joining a family business.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 4 Vocabulary franchise initial franchise fee startup costs royalty fees advertising fees Franchise Disclosure Document

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 5 Purchase an Existing Business Owners sell businesses for a variety of reasons including: insufficient profits new competition fear of changing economic conditions retirement dispute among partners illness of a partner

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 6 advertisements in the newspaper consulting a business broker networking There are many ways to find a business that is for sale including:

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 7 Advantages of Buying an Existing Business The equipment, suppliers, and procedures are in place. Goodwill may already be established. The seller may train the new owner. Established financial records exist. Financial arrangements may be easier.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 8 Disadvantages of Buying an Existing Business The business may be for sale because it is not profitable. Serious problems may be inherited. Capital is required.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 9 Steps in Purchasing a Business Write specific objectives about the kind of business you want to buy. Identify businesses for sale that meet the objectives. Meet with business sellers or brokers to identify specific opportunities.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 10 Obtain accounting records for the prior three years. Get important information in writing. reviewed by a lawyer reviewed by an accountant Visit during business hours to observe the business in action.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 11 Get expert help to determine the price to offer for the business. valuator Determine how you would finance the business.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 12 What are some of the advantages and disadvantages of buying an existing business?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 13 Franchise Ownership franchise a legal agreement that gives an individual the right to market a company’s products or services in a particular area franchisee the person who purchases a franchise franchisor the company that offers the franchise for purchase

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 14 The Franchise Opportunities Handbook Buying a Franchise: A Consumer Guide the Internet library books The Wall Street Journal Forbes, Barron’s, Entrepreneur, and Inc. Franchising opportunities can be found in a variety of resources including:

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operating Costs of a Franchise initial franchise fee the amount the local franchise owner pays in return for the right to run the franchise startup costs the costs associated with beginning a business Chapter 1 Slide 15

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 16 weekly or monthly payments made by the local owner to the franchise company advertising fees paid to the franchise company to support television, magazine, or other advertising of the franchise as a whole royalty fees

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 17 Investigate the Franchise Opportunity Franchise Disclosure Document (FDD) a regulatory document describing a franchise opportunity that prospective franchisees must receive before they sign a contract must be provided to franchisee at least 14 days before a contract is signed

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 18 background and experience of the business’s key executives costs of starting and maintaining the business terms of the franchise agreement acceptable reasons for contract termination the responsibilities you and the seller will have once you have invested in the opportunity Information contained in the FDD includes:

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 19 Evaluate a Franchise Study the disclosure document and proposed contract carefully. All costs and royalty fees should be provided. Interview current owners. shills business references who are paid to give favorable reports

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 20 Investigate claims about your potential earnings. Does projected local demand match potential earnings? Have the seller provide, in writing, the number and percentage of owners who have done as well as they claim you will. Investigate the franchisor’s history and profitability.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 21 Do not sign up immediately. Do not fall for a promise of easy money. Shop around. Compare to other business opportunities. Listen carefully to sales presentations.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 22 Determine what will happen if you want to cancel the franchise agreement. Remember that it is okay to ask for advice from professionals. Get the seller’s promises in writing.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 23 Advantages of Owning a Franchise An entrepreneur is provided with an established product or service. Franchisors offer management, technical, and other assistance. Equipment and supplies can be less expensive. A guarantee of consistency attracts customers.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 24 Disadvantages of Owning a Franchise Franchise fees can be costly and cut down on profits. Owners of franchises have less freedom to make decisions than other entrepreneurs.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 25 The franchisor can terminate the franchise agreement. Franchisees are dependent on the performance of other franchises in the chain.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 26 What should you consider when evaluating a franchise opportunity?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 27 Enter a Family Business The U.S. economy is dominated by family businesses. Some estimates indicate 90 percent of businesses are family owned. Many large companies are still owned by relatives of the company founder.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 28 Advantages of a Family Business Benefits of working at a family business include: pride and a sense of mission a feeling of continuity from keeping the business in the family for another generation enjoyment derived from working with relatives

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 29 Disadvantages of a Family Business Challenges of working in a family business include: family members, regardless of their ability, often hold senior management positions poor business decisions can be made it is difficult to retain non-family employees

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 30 Business and private life often affect each other. Independent decision making is difficult. It can be challenging to determine what to do with the business when there is not a family member available to run it. Family politics often enter into business decision making.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 31 What are some of the advantages and disadvantages of entering a family business?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 32 Starting Your Own Business If purchasing a franchise or joining a family business will not work for you, consider starting your own business.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 33 Advantages of Starting Your Own Business Independent business owners enjoy: complete autonomy over all business decisions the ability to create their own destiny the challenge of creating something brand new feeling triumphant when the business turns a profit

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 34 Disadvantages of Starting Your Own Business Risks to consider when starting your own business include: product demand is uncertain you must make decisions that other types of entrepreneurs do not need to make

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 35 Why is it more difficult to start a new business than to take over an existing business or purchase a franchise?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 36 Lesson 7.2 Choose a Legal Form of Business Goals List advantages and disadvantages of a sole proprietorship. List advantages and disadvantages of a partnership. List advantages and disadvantages of a corporation.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 37 Vocabulary sole proprietorship partnership corporation share of stock board of directors dividends

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 38 Sole Proprietorship sole proprietorship a business that is owned exclusively by one person

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 39 Advantages of a Sole Proprietorship minimal government regulation accurate tax records certain employment laws Sole proprietorship is the most common form of U.S. business ownership.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 40 Disadvantages of a Sole Proprietorship It can be difficult to raise money for the business. You bear the burden of all the risks. If the business fails, your personal assets can be jeopardized.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 41 Why are sole proprietorships the most common form of business ownership?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 42 Partnership partnership a business owned by two or more people Advantages of a partnership include: multiple sources of capital risks are spread among partners minimal government regulation

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 43 responsibilities and profits are shared can be held liable for errors of partners Disadvantages of a partnership include:

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 44 outlines the rights and responsibilities of each of the owners including business name names of partners investment by each partner delegation of management duties accounting methods used Partnership Agreement

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 45 profit and loss distribution salaries length of partnership conditions under which the partnership can be dissolved asset distribution upon dissolution of partnership procedure for dealing with the death of a partner rights to audit accounting documents

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 46

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 47 Name some of the advantages and disadvantages of a partnership.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 48 Corporation corporation a business that has the legal rights of a person but is independent of its owners share of stock a unit of ownership in a corporation The corporation, not the owners, transacts business.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 49 a group of people who meet several times a year to make important decisions affecting the company determine dividend payments dividends distributions of corporate profits to shareholders The board of directors is not involved in the daily management of the company. board of directors

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 50 Disadvantages of a Corporation The disadvantages of a corporation include: A lawyer is required to establish a corporation because a corporation is complex. costly

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 51 Corporations are subject to more government regulation than other types of businesses. Income is taxed twice. corporate income individual income Articles of incorporation must be filed.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 52 Advantages of a Corporation In a corporation, personal liability is limited to the amount of money each shareholder invested in the company. Personal assets of shareholders are protected. Corporations can raise money by selling stock.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 53 S Corporation a corporation organized under Subchapter S of the Internal Revenue Code not taxed as a business If the business looses money, owners can use the losses to offset other sources of personal income. tax break

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 54 Limited Liability Company Limited Liability Company (LLC) provides the benefits of partnership taxation and limited personal liability not subjected to the rules of an S corporation members can participate in business management LLCs have restrictions

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 55 What is the main benefit of setting up your business as a corporation?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 56 Lesson 7.3 Legal Issues and Business Ownership Goals Recognize how laws promote competition. Describe how entrepreneurs protect intellectual property.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 57 Describe when and how a business owner should seek legal advice. Identify regulations that protect the public and how they affect businesses.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 58 Vocabulary intellectual property patent copyright trademark contract

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 59 Regulations That Promote Competition The government has enacted various laws to help protect businesses.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 60 Antitrust Legislation Antitrust laws ban business activities that do not promote competition. Sherman Act Competitors can not get together to set prices at a certain level. Discussing pricing with competitors is illegal.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 61 It is illegal for a business to: require a customer to buy exclusively from it force a customer to purchase one good in order to be able to purchase another good Clayton Act

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 62 It is illegal to discriminate by charging different prices to different customers. Some economically sound reasons that allow for different prices include: volume discounts special distribution legal requirements that vary by location Retail stores are exempt if they are targeting a specific market. Robinson-Patman Act

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 63 Unfair or deceptive actions or practices by businesses that may cause an unfair competitive advantage are banned. false advertising Businesses are required to warn consumers about possible negative features of their product. potential side effects of medication Wheeler-Lea Act

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 64 Government Agencies that Protect Competition Justice Department The Antitrust Division takes legal action against any business it believes has tried to monopolize an industry. prosecutes businesses that violate antitrust laws

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 65 The FTC administers most of the laws dealing with fair competition. false advertising price setting by competitors price discrimination product misrepresentation Federal Trade Commission (FTC)

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 66 How do laws promote competition?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 67 Intellectual Property intellectual property the original creative work of an artist or inventor songs, novels, artistic designs, inventions No one can use someone else’s original work to make money.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 68 the grant of a property right to an inventor to exclude others from making, using, or selling his or her invention lasts for 20 years provisional patent application allows inventor one year to research details of an idea prior to filing a patent patent

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 69 an intellectual property law protects works of authorship remains in effect for 70 years after the death of an author trademark name, symbol, or special mark used to identify a business or brand of product copyright

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 70 How can entrepreneurs protect intellectual property rights?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 71 Laws that Protect Consumers Licenses State and local governments require some businesses to have licenses. training may be required inspections may be required

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 72 Local governments often establish zoning regulations that control what types of buildings can be built in specific areas. Consumer Protection Laws These laws protect the public from harmful products. Zoning Laws

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 73 Covering food, drugs, and cosmetics, this law bans selling products that are: impure improperly labeled falsely guaranteed unhealthful The Federal Food, Drug, and Cosmetic Act of 1938

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 74 sets safety standards for products other than food and drugs The Truth-In-Lending Act of 1968 requires all banks to calculate credit costs in the same way The Consumer Product Safety Act of 1972

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 75 helps consumers correct credit card billing errors during the investigation of disputed charges, interest cannot be accrued If charged on a credit card, payment for an inferior quality product can be withheld until resolution occurs. The Fair Credit Billing Act of 1974

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 76 What laws protect the public?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 77 Legal Issues Affecting Business Learning some basics about the laws affecting businesses will help you handle minor legal issues independently. Sometimes you will need to hire a lawyer.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Contracts contract a legally binding agreement between two or more persons or parties offer and acceptance one party offers or agrees to something and the other party accepts consideration what is exchanged for the promise Chapter 1 Slide 78

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 79 the parties are legally able to enter into a binding agreement legality a contract cannot have anything in it that is illegal or that would result in illegal activities capacity

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 80 the agreement is not based on deceit, mistakes, or unfair pressure genuine assent

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Torts Relating to Business Enterprises tort a wrong against people or organizations for which the law grants a remedy liability can be established through duty breach injury causation Chapter 1 Slide 81

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Agency Relationships agency a relationship that allows one party to act in a way that legally binds another party principal the person who authorizes another person (the agent) to enter into legal relationships on the principal’s behalf Chapter 1 Slide 82

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Hire a Lawyer At some point, you will probably need to hire a lawyer to assist you with legal issues affecting your business. Chapter 1 Slide 83

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 84 Name legal issues of which entrepreneurs should be aware.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 85 PERFORMANCE INDICATORS Explain the nature of business law Describe legal issues affecting businesses Describe strategies used to protect a business’s copyrights

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 86 Make an effective oral presentation Explain legal considerations for pricing Explain business ethics in product/service management Explain legal strategies used to protect trademarks

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 87 THINK CRITICALLY 1.Why is it important to consider copyright and trademark laws when selling merchandise? 2.Why are copyright and trademark laws hard to enforce in other countries?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 7 Slide 88 4.Why does a university need an attorney who specializes in copyright laws? 3.How can you determine the royalty percentage to be paid to a university for use of its emblem, logo, or mascot?