final Flashcards
what is a franchise and how is it regulated
a franchise is not a legal entity but a license
franchises are provincially regulated
which agreement will two parties enter upon the start-up of a franchise
franchise agreement
what are some clauses a franchise agreement may contain
location of business
training of all staff
franchisor owns overall rights and trademarks of company
suppliers of all equipment and inventory
what must a franchisor provide prior to entering into an agreement
franchisor must provide franchisee with a disclosure document
what are considered to be advantages of operating a franchised business
business plan is already established
product or service has been tested in the market
higher rate of success
what are considered to be disadvantages of operating a franchised business
substantial buy-in fee
little individual creativity is allowed
ongoing royalty fees paid to the franchisor
pursuant to the corporations act, which records are corporations required to keep and for how long
all constating documents:
articles
bylaws
minutes of meetings and resolutions
registers of past and present directors
shareholder registers
should be kept for 7 years
how long does the employment standards code require employee records to be kept for
requires employee records to be kept for at least 3 years
which business records does the canada revenue agency advise businesses to keep and for how long
receipts and invoices
bank statements
payroll records
CRA suggests keeping support documents for 6 years
what are the two different methods for buying/selling a business
purchasing the assets and purchasing the shares
what are the advantages of purchasing assets as a method of buying a business
to limit exposure to unwanted liabilities
parties can choose which assets and liabilities will be included in the transaction and what will not be
what are the disadvantages of purchasing assets as a method of buying a business
extensive transactional paperwork required
matter is more complex, time consuming and expensive
what are the advantages of purchasing shares as a method of buying a business
parties avoid conveyancing requirements of an asset purchase
title to assets remain in the name of the corporation which is carrying on the business
transaction is less complex and less expensive
what are disadvantages of buying shares as a method of buying a business
assets and liabilities of the seller are taken over without choice
what are the two alternative forms of agreements you can use for buying and selling a business
commercial real estate offer to purchase
purchasers lawyer may prepare a Purchase and Sale Agreement of their own
what types of property may be sold in an asset transaction
real and personal property
includes land and buildings, equipment, inventory etc
what is meant by “business due diligence” and what does this include
homework conducted by the buyer, with respect to the business being purchased
includes:
understanding of contracts
review of inventories
employee contracts
what is meant by “legal due diligence” and what does this include
homework carried out by each party’s lawyer with respect to matters including:
confirming titles to respective property involved
ensuring assets are free from encumbrances
companies office corporate search, land titles office search, personal property registry search
what matters are involved when performing “legal due diligence”?
minute book reviews
some related financial statement review
what would you use to keep all your searches and certificates organized
searches checklist should be kept and maintained
what is a closing agenda and what are some key pieces of information found in one
it is a plan used by parties lawyers to help them conduct closing of a transaction
it includes:
names of all documents
number of copies of each document
who is required to sign each document
any follow-up required
what is a reporting and opinion letter
a letter given by each lawyer to their respective clients
what is the difference between preference and common shares
preference shares is a share class having one right or preference over any other share class
common shares is a share class having no right or preference over any other share class
who elects directors of a corporation
shareholders must elect at least one director
