Question

Dagwood, Garfield and Snoopy decided to open a scotch tape boutique in a local shopping centre, No-Oaks Mall. Dagwood has a great deal of expertise in the operation of a scotch tape boutique, but only $25,000.00 in cash, which belongs to him and his wife, Blondie, all of which

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he is prepared to invest in the boutique. Blondie wants some ownership interest in the boutique as well as Dagwood. Garfield has numerous assets and is prepared to invest $100,000.00, but will spend most of his time on vacation. Snoopy has $1,000.00 to invest and has no other assets but will work full time in the

boutique and requires a salary. Dagwood is mindful that the business is risky and has the additional problem that Garfield and Snoopy fight like cats and dogs and that this may cause instability. The hope of the parties is that the new business, to be called AStuck On You@, will be successful and can be sold for a profit in two years.

Examine which form of business organization would be most beneficial for each of the parties. Consider the relevant factors. What format should they jointly decide upon?

Review the numerous terms and conditions of the Lease that Dagwood, Garfield and Snoopy must negotiate, making particular note of what terms will be of greatest concern to them. (each relevant point is worth 2 mark).

Answer 1

In this so called new business venture that the three parties are looking forwaerd to start, it is better that they move forward to start the business as now a days the boutique business in booming at various places due to the upgrowing fashion trend. Today people look at various trend on day to day basis. In this business it is better for Snoopy to be the active partner of this and be salary earned person because he and Garfied do always fight so there can be quarrel between the two more often,so all three can invest and let snoopy be the most active person in this business and Garfield with major portion of investment and Dagwood be slient partner along with this wife Blondie who would like to be a slient partner. So that Garfield can carry on his trip and Dagwood and Snoopy can look forward and look after the business. In the lease contract the entire power of attorney in taking a decision with business should be mentioned with Garfield as he is the main holding investor,but the business running authority can be transfered to Snoopy as he is looking forward to be a full time employer with the business. And the profit sharing will be more for Garfiled and the same ratio for the rest two.