1. Customized by Professor Ludlum October 31, 2016
Unit M
Customized by Professor Ludlum
October 31, 2016
Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning.

3. Sole Proprietorships
The simplest form of business; used by anyone who does business without creating an organization.
The owner is the business.

4. The sole proprietor is the simplest form of business; used by anyone who does business without creating an organization.
The owner is the business.
John Grisham, person
John Grisham, writer

5. Sole Proprietorships The owner has 100% control of the business.
The owner pays personal income taxes on all profits (highest tax rate) and is personally liable for all business debts.

6. Partnership: Two or more parties Co-owning a business For profit

7. General Partnerships
Created by express or implied agreement of the parties. Partners have right to:
Equal share profits and losses.
Equal ownership of the business.
Equal right to management.
UNLESS

8. General Partnerships
Entity vs. Aggregate Theory: not treated as an entity except for limited purposes.
Which one is Oklahoma?
Partners have joint and several liability for partnership debts.
Liability of incoming partner.

9. General Partnerships
Income is “passed through” the partnership to the individual partners, who pay personal taxes on the income.

10. Two people operate a lemonade stand Are they partners or employer/employee?

11. What if Have a partnership with a Written agreement
Smith-Jones-Davis-Park
And Smith dies?
Now what?

12. What if Have a partnership with a Written agreement
Smith-Jones-Davis-Park
And Smith dies but Mrs. Smith wants to be a partner in place of her husband, but no one else likes her.
Now what?

13. Partnerships Notice Requirements Actual Constructive
Partner’s Dissociation.
Partnership Termination.
Dissolution.
Winding Up of assets.
Notice Requirements
Actual
Constructive

14. Franchises
Any arrangement in which the owner of a trademark, trade name, or copyright licenses another to use that trademark, trade name, or copyright, under specified conditions or limitations, in the selling of goods and services.

15. Types of Franchises Distributorship Chain-style operations
(e.g. automobile dealerships)
Chain-style operations
(e.g. fast-food chains)
Manufacturing/processingplant arrangement
(e.g. soft-drink bottling companies, such as Coca-Cola)

16. Example of Franchise McDonalds Costs: $1m-$2m, depending on location
Minimum of $300,000 liquidity
No absentee owners

17. Example of Franchise McDonalds Fees to McDonalds
$45,000 / year for 20 years
Plus a percentage of sales (2-5% is range)

18. Why pay $900,000 to use the McDonald’s name
Why pay $900,000 to use the McDonald’s name? Can’t you start a restaurant and save that $900,000? What is the failure rate of new businesses? Especially restaurants?

20. I lived in Parsons 40 years ago. How many businesses survived?
Time Capsule
I lived in Parsons 40 years ago. How many businesses survived?

21. Thinking Question