Business Law and Franchising Lecture Flashcards

Review Overview

  • The session starts with instructions regarding the franchise situation and review process.

  • A focus on trademark rules and regulations, primarily concerning franchises.

Trademark and Franchise Terminations

  • Reference to a specific case dated 11/17/1983 regarding Ramada.

  • If a franchise agreement is terminated properly, all brand-associated materials, logos, and trademarks must be relinquished.
      - Example: A hotel group from Alabama cannot use Ramada logos after termination.

  • Assertion: Usage of the franchise's symbols implies payment for the franchise rights.

  • Analogy: One cannot use the branding of a competing business (Wendy's) without a paid franchise agreement.

  • Conclusion: Proper franchising adheres to payment protocols for the rights to brand usage.

Late Work Policy

  • Encouragement to submit late work; although penalties apply (e.g., reduction in points), it is allowed.

  • Reminder to submit vocab, chapter notes, and group notes prior to the instructor's departure.

  • Grades will be processed promptly to keep students informed of their standings.

Liability of a Franchise

  • Discussion shifts to Domino's and its operations in France, highlighting franchisee responsibilities.
      - Each franchisee operates independently, managing finances and employees while making royalty payments to Domino's.
      - Contractual definition: Franchisees are independent contractors, thus the franchiser (e.g., Domino's) is not liable for franchisee debts or obligations.

  • Legal Implications: If an accident occurs (example: negligence), claims will be directed to the franchisee, not the franchisor.
      - The court protects franchisors if the franchise is organized and operated correctly.

Key Legal Concepts

  • Importance of understanding the separate legal identities of franchisors and franchisees.

  • Franchisees hold contractual responsibilities, including negligence claims arising from their actions.
      - Example: A franchisee hires a negligent employee; the franchisee is held liable for any resulting accidents.

Exam and Testing Structure

  • Chapters Covered in Exam: Chapters 34, 35, 36, 37, 38, and 40 (Chapter 39 is excluded).

  • Students advised on the IRAC (Issue, Rule, Application, Conclusion) structure for answering exam questions.
      - No repetition of facts; focus on identifying issues and applying relevant rules to arrive at conclusions.

  • Preparation Tips: Encourage studying chapter notes and vocabulary to effectively tackle exam queries about liability and structure of various business entities.

Partnership Concepts

  • Reference to sole proprietorship and general partnerships.
      - Topics to cover: personal and tax liabilities of different business structures.

  • Required topics for understanding general partnership include:
      - Rights of general partners (pages 599-601).
      - Duties of general partners (pages 601-603).

Limited Partnerships and Special Partnerships

  • Defined requirements for a limited partnership (page 613).
      - Understand liability particulars for limited partners (pages 617-618).

  • Joint and Several Liability: Important legal concept explained on page 618.

  • Dissolution procedures for partnerships, including disassociation and winding up (pages 623-625).

Limited Liability Partnership (LLP) and Limited Liability Company (LLC)

  • Definition of an LLP (page 629) and explanation of partner liabilities in an LLC (pages 632-634).

  • Understand flow-through taxation (table question) and its implications for financial structures within an LLC.

  • Contrasting member-managed LLCs versus manager-managed LLCs (pages 640-641).

Corporate Structure

  • Formation of corporations (chapter 37) will cover:
      - Definition of a corporation (page 649).
      - Distinction between publicly held and closely held corporations (page 652).
      - Classifications of corporations:
        - For profit, not for profit, government-owned, domestic, foreign, and alien.

  • Definitional items include:
      - Promoter (page 655), Articles of Incorporation (page 655), Registered Agent (page 658), and Bylaws (page 659).
      - Key concepts: Ultra Vires Acts (page 663), Common Stock (page 663), and Preferred Stock (page 664).

Financing a Corporation

  • Discuss three major types of debt instruments used to finance corporations (debenture, bond, note) and two equity securities (common stock, preferred stock) for raising capital.
      - Corporations finance operations through issuing either debt or equity, which should be understood by students preparing for the exam.

Shareholder Rights and Corporate Management

  • Chapter 38 focuses on:
      - Definition of shareholders (page 673).
      - Understanding proxies (page 674) and the concept of piercing the corporate veil.
      - Overview of management structures and fiduciary duties (duty of obedience, duty of care, duty of loyalty) (pages 684-685).

  • Introduction to the Business Judgment Rule (page 685).

Franchising Types

  • Identification and definition of four types of franchises (page 711):
      - Distributorship Franchise
      - Processing Plant Franchise
      - Chain Style Franchise
      - Area Franchise.

Essay Assignments

  • Two fact-pattern essays each worth 15 points, emphasizing the IRAC method.
      - The first fact pattern relates to LLCs (chapter 36), while the second ties back to the LLC contents and chapter 38 specifics regarding liability.

  • Reminder to review all materials for completeness before submission.