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Case Study

Shania Jackson is a mature Christian thinking of opening a Christian coffeehouse near Denver, Colorado. Her husband, Marvin, is open to contributing of capital to the business, but he has no interest in participating in its operation or management.

Shania’s sister, Kelsey, is a new Christian who has told Shania that she’s been looking for an excuse to get out of the house and would love to be a part of the business. Kelsey’s husband, a non-Christian, opposes his wife’s involvement and has told her that he expects her to remain a stay-at-home mom to their 2 children, ages 13 and 15.

Shania’s neighbor, Carlos, is a non-Christian who has also expressed an interest in participating in the business to earn extra income. Carlos thinks the “Christian thing” has potential with all the big churches in the area, including a Mormon temple and a large Kingdom Hall of Jehovah’s Witnesses.

In researching the coffee business, Shania comes across a few franchise opportunities, some of which would require her to adopt the franchise name and trade dress, as well as others that would only require her to move into a turn-key facility and agree to purchase a certain volume of product every month for a period of at least 10 years. Both types of franchises offer training for her and any staff she might hire.

Shania has considered organizing her business as a sole proprietorship, a partnership of some sort, a corporation of some sort, an LLC, or even a joint venture. She is thinking of calling the business “The Gathering Place.”

STARTING AND NAMING A BUSINESS

As stated from the case study Shania Jackson is a mature Christian thinking of opening a Christian coffeehouse near Denver, Colorado. In effort to assist her with this venture, I will advise Shania on which of the six business forms (Franchise, Sole Proprietorship, Partnership, corporation, LLC, or joint venture) best accomplishes her business goals. In addition to this, I will also provide advice on naming her business, and finally which of the interested persons she should include in staffing her business, why, and in what role(s).

Advise Shania on which of the business forms best accomplishes her business goals.

Starting a business is not easy task. There are many things that need to be considered to ensure the success and profit of the business. Before advising Shania on what form of business she should enter into, I would first explain the pros and cons of each forms available. This would provide the necessary education she needs to make an informed decision, as well as, provide substance to my recommendation.

Forms of Business
All information provided relating to the forms of Business were pulled directly from the text as stated in Biblical worldview edition of dynamic business law. N. J. Kippenhan (Ed.) as written by Kubasek, Browne, Barkacs, Herron, and Dhooge, L. (2016).

Franchise:
A franchise is a business arrangement between an owner of a trade name or a trademark and a business that sells goods or services under a trade name or a trade mark. A perfect example of this form of business is a chain style business operation. This is a type of franchise in which the franchise operates under the franchise business name and is required to follow the franchisor’s standards and methods of business operation.

Advantages: (1). Help from the franchiser in starting the franchise. (2) Instant recognition due to the franchisors strong trademark or trade name. (3) Benefits from the franchisor’s word wide advertising.

Disadvantages: (1). Must meet the franchisor’s standards or risk losing the franchise. (2) Must pay franchise fees and under the control of the franchisor. (3) You must follow all franchise rules to keep the franchise relationship.

Sole Proprietorship:
Is defined as a business in which one person is in control of the management, profits and losses. An example of a Sole Proprietorship is a lawn mowing business, or a residential construction company. A Sole proprietor is the single person at the head of a sole proprietorship.

Advantages: (1) Creation is easy. (2) Proprietor is in control of management. (3) Proprietor keeps all profits.

Disadvantages: (1) Proprietor has personal liability for all losses and obligations. (2) Funding is limited to personal funding and loans.

Partnership
A voluntary association between two or more people who co-own a business for profit. You agree that you will share control of the business and split the profits equally.

Advantages: (1) Creation is easy. (2) Income of business is personal income. (3) Business losses can be deducted from taxes

Disadvantages: (1) Each partner has personal liability for all losses, debts and obligations including those of another partner.

Corporation:
A legal entity formed by issuing stock to investors who are the owners of the corporation. Shareholders are the investors of the corporation, who own the corporation. Examples of a corporation include Walmart, Apple, McDonald’s, or Nike.

Advantages: (1) The Corporation can be held liable for existing debts; however, the shareholders cannot be held personally liable for the debts of the corporation. (2). Liability is usually limited to the amount shareholders have invested.

Disadvantages: (1) The corporation itself must pay taxes on the its profit. (2) In addition to this, the shareholders must pay taxes on the dividends they receive from the corporation.