The company I work for, a Limited Liability Corporation, recently had a shake-up in managment. The old president/CEO was removed by the board of directors. This change was none too popular among the field crews. It also made us realize that we have no idea how the company is structured. So, if you could explain the L.L.C. structure (in general) to a bunch of paramedics that would be very helpful.
Well… I don’t know how helpful this will be to your situation but this is from my Law notes this past semester:
C. Limited Liability Partnership – some professionals can’t incorporate in the same way as other businesses do – doctors, lawyers, accountants. In Alberta, if more than one professional wants to do business together, the business must be a partnership.
These professionals who cannot incorporate are allowed to so business as a limited liability partnership. LLP
LLP gives you innocent partner protection. Innocent partners are not personally liable for the wrongful actions of their partners. You are an innocent partner if:
You didn’t know about the problem
You were not working on the file
You can lose your entire investment in the business.
Registration is required with Corporate Registry.
The structure of the LLC is going to depend on how the members set it up. The LLC you work for has a board of directors; they might be the owners, they might not. But either way, they can hire or fire any “managers” that they want (including your CEO).
Flutterby, you’ve described an LLP, not an LLC. While they’re similar in tax treatment (pass-through), they’re different in structure (no personal liability for members in an LLC). They can also be similar in management (the members can manage the LLC just as the partners manage the LLP), or the LLC can hire out its management, just as a corporation does. On preview, what Kat said.
St. Urho, this is all off the top of my head, in a field outside my own. From what I recall, you pretty much have to look at the LLC’s Operating Agreement to see how the members agreed to structure the LLC’s management.
If I decided to buy three Wendy’s restaurants in my area, wouldn’t that be an LLC? What would I “own” exactly? Am I a shareholder in Wendy’s stock? If the Wendy’s Corporation goes bankrupt I would not be liable would I? I would in a sense be responsible for my stores but ultimately I would have to answer to whomever owned the entire corporation, correct?
No worries. When I was studying for exams one semester, I got so wrapped up in it that I showed up for an open book final with nothing – because I thought it was a closed book final. Boy, was I sure I’d failed that class! Good luck with your exams.
I’ve never seen a Wendy’s franchise agreement, so I don’t know if they require a certain corporate form for their franchisees, nor do I know precisely the allocation of responsiblity as between the owner of the franchise and the parent corporation.
You could set up your business in any of several different fashions.
You could start it as an LLC with yourself as the only member. (Not legal in some states, IIRC.) In this case, you aren’t personally liable for the company’s debts.
You could start it as a sole proprietorship. In that case, you would be personally liable for the company’s debts.
You appear to not understand fast food franchising. This is understandable, as I don’t recall having been taught how that worked in school, but I DID work in food service for a while, so here it goes:
When you buy the 3 local Wendy’s stores, you come to own their assets. One of the assets associated with those stores is a contractual relationship with Wendy’s head office. You pay them a certain sum of money based on certain factors and conduct your business in a certain (tightly controlled) fashion, and they’ll let you continue to run those stores with a Wendy’s sign out front. Screw up a few times, and they’ll yank your franchise.
If that happens you’ll be unable to keep their sign up, use their brand, or use any of their branded food service products. You could keep selling burgers under a new brand you make up, or you could try to persuade McDonald’s to grant you an appropriate franchise.
In short, ownership of part of the “Wendy’s North America” corporation or whatever it’s called would not normally be a needed element of operating a small Wendy’s franchise.
I’ll note that of the small business owners I have known in my life, all of them seemed to think that you should avoid running a sole proprietorship, at least after they’d been around the block a few times.
The last company I worked for was a Corporation before I joined, with an Inc. after its name. Shortly before I joined, it turned into a Limited Liability Company, with an LLC after its name. In both cases, it was owned by a controlling company (with basically a single owner), and the makeup of the organizatioon was pretty much the same. No changes in management or structure. The main differences seemed to be on paper.
Oh yeah. And I’m 99.9% certain that if Wendy’s Corporate went bankrupt on a franchisee, you wouldn’t be liable for their debts.
Although, if you’d pre-paid your franchise rights for the year and then they went under, you might wind up having paid a bunch for a bunch of nothing.
I’d bet that if they went bankrupt it’d be a Chapter 11 though, and they would just restructure, not liquidate. You would probably not notice a difference during a bankruptcy, unless you had ordered something directly from them (branded product, perhaps?) immediately prior to their filing and they filed before your order was filled by the warehouse guys.
As someone else said, the structure of an LLC is determined largely by the people who set it up. Typically, this is spelled out, at least in general terms, in the Articles of Orgnization, which is the document filed to create an LLC. A little Googling suggests that these are filed with the Secretary of State in Colorado; you could probably get a copy of your employer’s Articles of Organization from the Secretary of State if you’re interested.
The Colorado Office of Economic Development has a little blurb about LLC’s here.
If you really want to get into detail, you can read the relevant statute, which appears to be at Article 80 of the Colorado Statutes. (You can go here , and then select Title 7, Corporations and Associations, and then select Limited Liability Companies).