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Chapter 39: Special Business Forms and Private Franchises
§ 1:  Special Business Forms <ul><li>Joint Venture: two or more entities combine efforts or property for a single transact...
JV Characteristics <ul><li>Resembles a partnership and is taxed like a partnership. However, a JV is limited in time and s...
JV Rights and Liabilities <ul><li>JV members owe a fiduciary duty to each other (loyalty, no conflicts of interest). </li>...
Other Entities <ul><li>Syndicate  (Investment Group): group of individuals getting together to finance a particular projec...
Other Entities  [2] <ul><li>Business Trust  is created by a written agreement setting forth the interests of the beneficia...
§ 2:  Private Franchises <ul><li>Franchisor  (Owner of trademark, trade name or copyright) licenses  Franchisee  to use th...
Franchising  [2] <ul><li>Governed by commercial sales and contract law.  If franchise is primarily for the sale of goods, ...
Franchising  [3] <ul><li>Franchise contract can specify Franchisee’s type of business entity including capital structure, ...
Law on the Web <ul><li>U.S. Small Business Administration online . </li></ul><ul><li>Federal Trade Commission and state re...
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Transcript of "39"

  1. 1. Chapter 39: Special Business Forms and Private Franchises
  2. 2. § 1: Special Business Forms <ul><li>Joint Venture: two or more entities combine efforts or property for a single transaction or project. </li></ul><ul><li>Unless agreed otherwise, JV’s share profits and losses equally. </li></ul><ul><li>Common in international transactions when U.S. companies wish to expand overseas. </li></ul>
  3. 3. JV Characteristics <ul><li>Resembles a partnership and is taxed like a partnership. However, a JV is limited in time and scope, whereas a partnership is an ongoing business. Other differences: </li></ul><ul><ul><li>JV members has less implied and apparent authority than partners. </li></ul></ul><ul><ul><li>Death of JV member does not terminate JV. </li></ul></ul><ul><li>JV members can specify duration. If not, then JV terminates when purpose is accomplished. </li></ul>
  4. 4. JV Rights and Liabilities <ul><li>JV members owe a fiduciary duty to each other (loyalty, no conflicts of interest). </li></ul><ul><li>JV members have equal right to manage the business. </li></ul><ul><li>Case 39.1: Ultralite Container Corp. v. American President Lines (1999). </li></ul>
  5. 5. Other Entities <ul><li>Syndicate (Investment Group): group of individuals getting together to finance a particular project. </li></ul><ul><li>Joint Stock Company is a hybrid of partnership and corporation: (1) ownership represented by shares of stock; (2)managed by directors and officers of the company; and (3) can have a perpetual existence. </li></ul>
  6. 6. Other Entities [2] <ul><li>Business Trust is created by a written agreement setting forth the interests of the beneficiaries and obligations and powers of trustees. Legal ownership and management of property remains with trustees and profits distributed to the beneficiaries. </li></ul><ul><li>Cooperative is an association organized to provide a not-for-profit service to members. </li></ul>
  7. 7. § 2: Private Franchises <ul><li>Franchisor (Owner of trademark, trade name or copyright) licenses Franchisee to use the trade mark, trade name or copyright in the sale of goods or services. </li></ul><ul><ul><li>Distributorship. </li></ul></ul><ul><ul><li>Chain Style Business Operation. </li></ul></ul><ul><ul><li>Manufacturing or Processing Arrangement. </li></ul></ul>
  8. 8. Franchising [2] <ul><li>Governed by commercial sales and contract law. If franchise is primarily for the sale of goods, UCC Article 2 governs. </li></ul><ul><li>State and federal laws regulate franchising to protect franchisee. </li></ul><ul><li>The contract states parties’ rights and duties and can include an exclusive “territory” to market goods/services. Case 39.2: Camp Creek v. Sheraton Franchise Corp. (1998). </li></ul>
  9. 9. Franchising [3] <ul><li>Franchise contract can specify Franchisee’s type of business entity including capital structure, sales quotas and record keeping. </li></ul><ul><li>Quality Control is a legitimate issue for Franchisor because of good will, reputation and trademark value. Courts will not question Franchisor’s strict supervision but Franchisor may be liable for torts of agents. </li></ul><ul><ul><li>Case 39.3 Miller v. D.F.Zee’s Inc. (1998). </li></ul></ul>
  10. 10. Law on the Web <ul><li>U.S. Small Business Administration online . </li></ul><ul><li>Federal Trade Commission and state regulations regarding franchising . </li></ul><ul><li>Franchising.org </li></ul><ul><li>Legal Research Exercises on the Web. </li></ul>
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