Business Organization

Business Organization

A franchise is a form of business that follows strict guidelines from the franchisor. The major driving force, apart from revenue, for the franchisor is building a trademark and building a successful business concept. On the other hand, the franchisee is obligated to carry out all activities including products and services for which the trademark has been made successful. This means that the franchisee has to use logos, trademarks and other signs that have been made famous by the franchisor. The model of franchising resembles renting a business rather than owning one. There is a lot of standardization that is required, meaning that the franchisee’s control is very minimal for the duration of the contract. There are two franchising choices available to Betty. First, she would be required to adopt the franchise’s name and all trademarks and second, she would be required to move into a turn-key facility and agree to purchase a certain volume of product every month for a period of no less than 10 years. Both options provide training for her and her staff. For the first option, Betty would be unable to build her own brand as she envisages when she picks the name “The Gathering Place”. This is because she would be required to adopt the name and trademarks of the franchise. The second option also limits her independence as she would be required to move to a predetermined location and also adopt the procedures of the franchise as she brews her coffee. This will be necessitated by the fact that she would be using the supplier’s raw materials for a period of 10 years. Betty would be required to turn in a fee that would be deducted from gross sales rather than from profits. She would also be required to contribute to corporate advertising in addition to paying a hefty startup fee.

A sole proprietorship is a business that is owned by a single person. This unincorporated business model has all the liabilities being carried by the individual. This means that all losses and profits are reported as the owner’s returns. Betty would do well here as she would control her own business. This model is however advised for people who seek businesses that do not have large capital needs as most funding is sourced from debt since there is no membership or stock to trade. This model nevertheless allows the business proprietor to exercise more control over the business.

There are two types of general partnerships: A general partnership and a limited liability partnership (LLP). A general partnership is one that has two or more co-owners who are in the business for profit. These partners are liable for the debts of their business whether they helped incur them or not. All partners have the right to management as they all have equal ownership. When transferring ownership between partners, only the partnership interest value is transferable and not the overall interests; like management. Therefore, when a partner leaves, he/she is entitled to his/her stake in the business.

Partnerships are easy to form as they can be written or verbal and still binding in law. The advantage of a partnership is that there is no double taxation and little money is left for the Internal Revenue Services (IRS). Additionally, sourcing for capital is easier as partners assist each other. Finally, when considering this business form, Betty should find solace in the fact that there are numerous laws and traditions that govern it hence making it easy to start, run and terminate.

A limited liability partnership (LLP) is more like a general partnership except that partners are not liable for each others debts in the partnership. This difference and the fact that LLPs must file annual returns in addition to being registered by filing a statement of qualification are the only ones that set LLPs apart from general partnerships. It is however not known the extent to which partners are protected to each others liabilities as LLP law is still not well developed.

Corporations are business models where investors and managers are protected from personal liabilities. As corporations are separate entities from their stakeholders, the limit of liability extends to actions and debts of others, but not to personal negligence. Therefore, individuals are responsible for their own acts. They are also very flexible when transferring ownership between investors. Stocks are easily bought and sold in this model making the problem of interest transferability non-existent. The major disadvantage of a corporation is that there are many expenses, efforts and procedures required in starting them. Before they can be fully created and successfully operated, a lot of red tape has to be followed.

Betty is considering a model that will allow her to easily pool resources, exercise authority in the direction of her venture and also avoid liability of members she might consider as partners. The business model that offers this is the limited partnership. This type of business has two types of partners: general partners, who are involved in the management of this entity and limited partners, who are silent and only risk their investment in the business. A revised model of limited partnerships has not taken root but is aimed at reducing the personal liability of general partners. This model is known as the limited liability limited partnership (LLLP). In this model, Betty can accept her husband’s offer to be a partner who is not interested in management. As this model cannot be informally formed, Betty must file for a certificate of limited partnership in the office of the secretary of state. She should consider John’s offer but not that of Alice. This is because the rift that involving Alice may cause in her home may not be worth it for the business since her husband is already opposed to it. Additionally, she should consider taking Erma on as her employee as she gets the concepts of the business including the possible sources of clientele.

The Gathering Place is not a viable business name for the venture as it was registered to a non-profit organization on 2nd April, 2012. Therefore, a different name should be considered.
Business experts advise that one should pick a name that stands out and also that embodies the business’ values and distinguishing characteristics (Spiro, 2010). The Gathering Place is oft connoted in the bible as a place where believers went to worship. Therefore, in choosing the name, Betty was well aware about her prospective clientele. She wanted the name to be a reflection of the Christian values that went into crafting the coffee house’s values and the characteristics that they would want clients to associate them with. It is a fitting business name and would build a successful trademark that would eventually have become a recognizable brand.



Spiro, J., (2010). How to Choose the Best Name For Your Business. Retrieved on 18th Nov, 2013 < >


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