Legal Question in Business Law in Arizona

As a Franchise Attorney I think you should be more concerned that just the forms that need to accompany the transaction. You need to carefully evaluate the investment. What are you going to get for $10k? That's a lot of money for only a 1% ownership interest in a local business. Also, what type of company is it - corporation, partnership, sole proprietorship? The answer will determine how and to what extent you can protect yourself. Consult with a good business or franchise attorney for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

I concur with the answer above. If you are going to invest $10,000 in a new or existing business it might be a good idea to pay our $420 consultation fee and look at the whole picture, including the legal grounding of the company, and the legal aspects of your relationship to the company, etc. Many businesses have no clue about the state and federal law, including securities law! that govern their company, including its formation and the sale of shares of stock or ownership interests in it. The last thing you as an investor want to do is to invest in a company and then be in legal trouble. (Not too difficult to avoid but need to know where you are to avoid issues.). That being said, you may want a subscription agreement, operating agreement for LLC, shareholder agreement or buy-sell agreement etc. All of these documents are very valuable for a number of reasons and all are relatively low cost. What kind of company (INC or LLC, etc.) is a lecture (which I used to give at ASU) in itself (and free if you form the company with our law firm - as are some of the above documents). So, the answer to the question "What kind of business entity do I want? is: It depends on where you are (state), what is being invested, how co will be run (ownership and management structure), etc. etc.

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