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Chapter 35 Sole Proprietorships and Franchises See Separate Lecture Outline System I NTRODUCTION The most common forms of business organization are the sole proprietorship and, when two or more persons are involved, the partnership and the corporation, with the limited liability company becoming in- creasingly popular. In this chapter, the basic features of sole proprietorships are briefed, and some of their advantages and disadvantages are spelled out. There is also a discussion of private franchises. A DDITIONAL  R ESOURCES A UDIO  & V IDEO  S UPPLEMENTS The following audio and video supplements relate to topics discussed in this chapter— PowerPoint Slides To highlight some of this chapter’s key points, you might use the Lecture Review PowerPoint slides compiled for Chapter 35. 191
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192           INSTRUCTOR’S MANUAL TO ACCOMPANY  BUSINESS LAW , ELEVENTH EDITION South-Western’s Business Law Video Series The situational video  Business Organizations  provides an opportunity for your students to review the material presented in this chapter.
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CHAPTER 35:  SOLE PROPRIETORSHIPS AND FRANCHISES           193 C HAPTER  O UTLINE I. Sole Proprietorships The simplest form of business is a sole proprietorship.    Sole proprietorships constitute over two-thirds of American businesses.   They are usually small enterprises—99 percent of those in the United States earn less than $1 million per year. A. A DVANTAGES   OF   THE  S OLE  P ROPRIETORSHIP Sole proprietorships are the easiest and least expensive business forms to set up.  They are also the most flexible and, depending on the circumstances, may have the lowest tax rate. B. D ISADVANTAGES   OF   THE  S OLE  P ROPRIETORSHIP The proprietor bears all of the financial risk of losses and liability, however, and the ability to raise capital is limited. C ASE  S YNOPSIS Case 35.1: Garden City Boxing Club, Inc. v. Dominguez Garden City Boxing Club, Inc. (GCB), owned the exclusive right to broadcast via closed-circuit television several prizefights and sold the right to receive the broadcasts to commercial venues. Antenas Enterprises sells satellite television systems under a contract with DISH Network. Antenas identified a new customer as Jose Melendez at a commercial (restaurant) address but designated the  account residential.   The   business’s   patrons   watched   several   GCB   fights,   but   the   business   paid   only   the residential rate to DISH and nothing to GCB. GCB filed a suit in a federal district court against Antenas’s owner.
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