Chapter 26 - Franchises, Joint Ventures and Nonprofit Corps. Flashcards Preview

BSAD 3200 - Unit 2 > Chapter 26 - Franchises, Joint Ventures and Nonprofit Corps. > Flashcards

Flashcards in Chapter 26 - Franchises, Joint Ventures and Nonprofit Corps. Deck (7)
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1
Q

Franchises

A

1-Franchisor (McDonalds), Franchisee (who buys)

2
Q

Franchisee Rule

A

1- Not fully disclosing everything to franchisee is why this rule was made
2. There are certain things a franchisor must disclose - copy of the franchisor’s current disclosure document (14 days before signing)

3
Q

Franchisor Liability

A
  • Frnachisor is typically not liable for torts and crimes of franchisees
  • Is liable if involved in the day to day activities.
  • Franchisor can mandate how the food is mad and design of the store
4
Q

Allen v. Choice Hotels International

A
  • Mrs. Allen
    s husband was killed by some burglars that followed them to the hotel.
  • The Allen’s went into the room the the burglars knocked on the door and they robbed the Allens and killed him.
    -Mrs. Allen said that the hotels had a duty to protect - peep hole and door secure.
    -She believed the hotels should be responsible for the death.
    -Choice Hotels as the franchisor was not liable.
5
Q

Joint Ventures

A
  • Two or more persons enter into an agreement to accomplish a common project
  • Usually, when project is over, they dissolve the entity.
  • Usually short term
  • Taxed like a partnership (flow through) unless they form a corporation.
6
Q

Non-profit Corporations

A
  • Nonprofit v. Tax exempt v. Charity - are not synonomous
  • To be charity, need to meet requirements under the internal revenue code 501(C)(3)
  • File “Articles of Incorporation”
7
Q

New Faith v. Commissioner of IRS

A
  • Fighting over tax status
  • New Faith operated lunch trucks and said purpose was to feed the poor as part of charity, but they were charging people for the lunch. They were making a profit.
  • If not charitable, they should be paying taxes
  • Court ruled in favor of the IRS because new faith was involved in a trade business.
  • Revoked their status and treated as a c-corp.