I.

Executive Summary

Remedios mother want to expand the business around region III by putting a branch to San
Fernando but due to lack of capital they cannot execute the plan, therefore they make a
decision which help to the business to execute the plan made. As the decision of the manager
which is Remedios is to change ownership. But there is many kinds of ownership like
partnership, corporation, cooperatives and sole proprietor which the existing ownership. Base
on my finding the most suitable ownership is partnership. Partnership have plenty of rights and
low cost that could benefits the business, also easy to form. The partners of the types of
ownership have an obligation to do to maintain the health of their business. They also can
participate to the management, therefore became a manager that could be less burden to the
business cost.

As an alternative solution bank loan maybe one of the source of capital that could the plan may
executed at the given time, cost and place. However, the bank Loan is very risk it's because bank
are not allowing the lender to lend without consideration. It was a pledge of property or
mortgage. Once the lender are not or failed to pay. The bank will sell it in action for the
payment of their obligation. But this alternative solution can get you a capital which enough for
the project expansion.

II. Statement of the problem

Remedios mother want to expond their business around region III two years from now by
opening a new branch. However, they are no sufficient funds to put up even a branch. Her
mother don't want to rely in a bank loan. The family business was running successfully and her
mother said that "Timing is very important in business" therefore her mother insisted that they
need to diversified their business. However, budget is important to execute the plan insisted by
her mother. Because of her mother don't want to get a bank loan the only option given by
Remedios is to change a ownership of the business.

The problem in this case (short term) what kind of ownership is the most applicable to the
business restaurant that it's might be continuously to successed. If that so, they need to
analyzed if the ownership will give an advantage to the business. If the a new branch was launch
we need an employee to hired. (Long term) Financing the construction of a new branch. Budget
in the operation while the construction is contenuously process.

As Remedios decision absolutely correct if they need to get capital for exponding their business,
however their is a possible consequences if they are choosing to change in ownership. First you
need associated with your new partners if it's partnership, shareholders if it's corporation.
Second you need to trust your comrades. And third get ready to possible cost and losses.
Manager must choose the most suitable ownership that can led to business success. Also the
person you must a little research to the future partners or associatees to be secured your
business. Must have reputation, integrity and honest that can led to good governance.

III. Causes of the problem

Capital is most imporant when you put up a business, due of lack of capital in the given cases,
Remedios think an option to gain capital for the project expansion of the business by putting a
branch in different aria in Region III. Her mother don't want to rely in bank loan, I thought its
becaused of interest loan along with attachment of in or pledge in the given loan. If she did not
pay in due, the property will sale in auction for payment of obligation in bank. That why her
mother wasn't to rely in bank. As a option given by Remedios was to change the ownership of
the business.

Remedios must think what kind of ownership is most suitable for their business. There are many
kind of ownership that can possible benefited to the business restaurant there is partnership,
corporation, joint venture and cooperatives. However, Partnership and Corporation, I think the
most applicable in business restaurant. In partnership, it is ease of formation that require one
two person to form. There less legal requirements to comply.

This are the cost benefits of forming a partnership

Cost
Formation cost - this are the cost which needed to draft the agreement between the
partners. This cost include legal cost, licence and registration fee.

Taxation - This cost is regulated by the Internal Revenue which the business need to fill a tax
return. And this cost are use by the government for public welfare.

Fiduciary cost - This cost are the insure or to avoid the breach of contract between the parties,
it's include additional attorneys and accountants fees.

Benefits

Profits - the partners have the rights to share the earning of the business, with accordance to
confirmity of their ratio agreed upon.

Interest - the partners have rights to interest to the partnership, because all partners have a
right to manage the business therefore they have the right to share to the fruits thereof.

Rights - the partners have privilege to possess the rights as a partners, and this are:

Rights of Partners in a Business Partnership

1. Right to Take Part in the Conduct of the 10. No New Partner to be Introduced
Business
11. No Liability before Joining the Firm
2. Right to be Consulted
12. Right to Retire
3. Right to have Access to Books
13. Right not to be Expelled
4. Right to Share Profits
14. Right to Carry on Competing Business
5. Right to Interest on Capital
15. Right to Share Subsequent Profits After
6. Right to Interest on Advance Retirement

7. Right to be Indemnified

8. Right to the Use of the Partnership Property

9. Power in an Emergency

The pros and cons of partnership:

Pros Cons

Shared cost of start-up. Partners in a general partnership are jointly

and individually liable for the business
activities of the other. If your partner skips
town, you'll be liable for all the debts, not just
half of them.

Shared responsibilities and work. Shared profits.

Shared business risks and expenses.
You do not have total control over the
business. Decisions are shared, and differences
of opinion can lead to disagreements, a "falling
out," or even one partner buying out the
other.

Complementary skills and additional contacts A friendship may not survive a partnership.
of each partner can lead to the achievement Keep in mind John D. Rockefeller's famous
of greater financial results together than words: "A friendship founded on business is a
would be possible apart. good deal better than a business founded on
friendship."

Mutual support and motivation

Forming a corporation is very costly than partnership and sole propraitor, but its very
advantageous interms of existences and obligation. As of now the corporation is amended by
requiring a corporator to established even they are two like a partnership. Thats why its very
easy to form also. However it's costly. Interms of benefits of corporation they are limited
liabilities some of the ownership they have priviledge to have unlimited liability in consequeses
of ther personal property in corporation is opposite to other ownership, their liability is only to
jurisdiction of the corporation itself. Another is Tax advantage, establishing creadibility,
unlimited life, transferability of ownership, raising capital, retirement plans. This are the pros
and cons of the corporation:

Corporation pros and cons

Pros Cons

Protection from Legal Liability Tax Liability

Attracting Investors Time and Cost

Stock and Stock Options for Employees More Complicated

Organization Following Corporate Formalities

Shareholder Protection Two Tax Filings

Right to Due Process and Equal Protection Heavy Regulation

Freedom of Speech No Right to Legal Counsel

Self-Incrimination

Rights of shareholders

 Voting rights on issues that affect the corporation as a whole

 Rights related to the assets of the corporation
 Rights related to the transfer of stock
 Rights to receive dividends as declared by the board of directors of the corporation
 Rights to inspect the records and books of the corporation
 Rights to bring suit against the corporation for wrongful acts by the directors and officers
of the corporation
 Rights to share in the proceeds recovered when the corporation liquidates its assets
First of all, because the decision of the manager is to change ownership, they must seek the
most suitable person for their business. This person must have reputation, integrity and honest.
Why she need to a person who possesed a good characteristic?. It because to governed the
business properly, good governance is very important to business success if the person have no
quality of it. The business will down through impropey manage the business. Inshort business
successful is in the hand of the owners and the management.

Characteristic of manager

 Leadership  Time Management

 Experience  Reliability
 Communication  Delegation
 Knowledge  Confidence
 Organization  Respect for Employees

As the result of expansion of the business they need to hire a professional stuff that for up
coming branch. And the existing employee of the restaurant can be promoted to higher position
if they are qualified to the position vacant. However, if they're not suitable to the position they
need to hired a new.

Base on my research changing ownership is can be one of the source of capital, but be careful
in choosing what kind of ownership should suitable in business. There is my types of ownership
like partnership, corporation (sole/closed), cooperative including the sole proprietor which the
existing ownership. But base on the information that I gathered the most suitable ownership in
business restaurant is partnership. Why? It's because in partnership is very easy to form,
because of the time of implementation must short and the problem is capital. Therefore the
must suitable is partnership, this kinds of ownership was low cost and less legal requirement an
like corporation which have a lot of requirement to comply. In terms of capital, partners have a
rights to invest or add capital for the project, or in case of insolvency of the business. A partners
are oblige to pay their liability up to their personal property. In the partnership all members are
have the right and responsibility to management. Therefore they have right to manage the
business. However, managing partners are not obliged to received a salary for there service
because they are the owners of the business.

IV. Decision Criteria and Alternative Solution

The decision of change in ownership must be achieved the goals set, reliable in the business
operation, not costly, beneficial to the business, easy to manage and also no possible problem
or conflict. This criterial for decision are needed to have better run the business successfully and
to manage the business according to the goals set.

Business Goal- the goal of the business restaurant is to serve quality service to the customer
and to expand their business.

Less cost- decision on changing ownership of the business must low cost, because the main
problem is capital, we are seek for the possible less cost to save money and to maximize the
profits. As the business term "minimize the cost, maximize profits"

Beneficial of the business- the businessman are most invest to the business that they are know
that will growing and think that it will benefits them.

Easy to manage - the steward of the business leds the road to success.

No possible conflict- the decision must be prevent to the conflict between the management and
the possible owners. The coordination between the owners amd the stewards can led to good
governance of the business operation.

This criteria's are make the decision effective and efficient to expand the business restaurant.
However, Good governance is the more important when the business running. As future
accountant we must considered the possible results of the decision even if it's fails or successes.
We must research further to solve the problem issues. Because the problem is restaurant the
change in ownership maybe one of the possible solution to the problem. However, sole to other
ownership is I think, it very difficult to adjust as an owner. If we considered the other option
(like bank loan is acceptable to me, it's because of the owners will can get capital in
consideration of the pledge of property, as disadvantage of it is, when the loan is not been paid
on the time, the property will sell in public auction.

As future accountant option is important to seek the most solution to problem encounter in the
business, further researcher in needed to produce good decision by knowing the possible
outcome or result to the problem. Also more option or alternative solution help to manager to
decided which of the most beneficial or most advantagous to help the business plan. In this
cases the main problem is capital for financing the expansion of business restaurant considering
also the financing the operation while the construction is in progress. This are some alternative
solution to the problem cases:

1. Bank loan.

Bank loan is one of the most basic source of capital in terms of business. The have a
capacity to give the enough capital need for many project of the most business, they says that
banks are the business friend because banks are always there when the business are need some
help in terms o financial matters. However, bank also have considerations in making loan to
business. They will screen the lendee if he/she have capacity to pay, looking for the credit
standing of the lendee, they will secure the loan by giving a collateral. If the lendee did not pay
the property will sale for the payment of the obligation. But bank gives a terms of payment base
on the purpose of use. And also they give the small interest to the loan. However, we need to
consider the possible pros and cons of the bank loan to the business to know if it help the
business or not.

Pros Cons

Very low, fixed interest loan Lengthly payment

Predictable monthly payment Longer wait time

Help build business credit Requires strong credit

Professional banking relationship Usually requires collateral

Availability for many use

2. Borrowing from friends and relatives.

Borrowing from the people how always on your sides is one of the safe option to run awy
from any risk. Also anytime you want to pay the loan is okey for them However, relation to
family is not concern to business because business is separate entity. Also it may have possibility
that it make have a conflict between family and business. And also the time of implementation
will not be execute immediately because we will not collect enough fund to.

Pros Cons

low interest or possible of no interest Can't execute the plan immediately

Anytime you can pay Family conflicts and problem

Motivation

3. Grants for sole proprietor

One of possible source of capital is the government grants. In business government help
the business growing by granting loan. DTI is government agency that regulates the small
business trade to operate they have a lot of project to help the business growth. Sole proprietor
and partnership is under the DTI and the corporation is under the SEC. DTI program was the
"Pondo sa Pagbabago at sa Pag-asenso". This program help the businessman to make loan for
low interest with amount of 5,000 up to 200,000 pesos. The only needed is the past all
requirements needed. There no collateral or pledge of property to make loan like banks. This
programs are welcome to all small business However, they also have screening which business
they will granting loan. This are the possible pros and cons of grants for sole proprietor.

Pros Cons

No collateral Grant application can suck up a have amount

of your time and money

Relationship The program may be massively oversubscribed

Grants are essentially free

Criteria Bank loan Government grant Borrowing from
relatives

Reliability Accurate for the Reliable Accurate for family

project business

Cost of Less cost No cost either less or no cost.

implementation

Risk High risk Low risk Low risk

Benefits Execute the plan for free capital Support from relatives
expansion

Convenience Easy to establish not easy to past an Easy to establish

application

Time of immediately There is no possiblity Possible but In some

implementation other day

V. Recommended solution, Implementation and Justification

Recommendation

The most appropriate solution is to change ownership to collect capital for the project
expansion of the business restaurant. And most suitable ownership is partnership as to form
and share, the partnership is the one of the possible solution to the problem. The partners are
obliged to do for the sake of healthy business operation. Also partners are easy to form because
there no much legal requirement to comply to SEC unlike corporation which is very costly
because of legal and other fees needed to established and lot of requirement and papers need.
Therefore, partnership is the only ownership best in restaurant. Also you don't need to hire
anymore a manager to manage the business, because the partners are can participate to the
business affairs. However, if the manager have no quality of being manager they need to.
As the solution of the problem of lack of capital. They will can get enough capital to execute the
plan of expansion. Also as the project was executed the operation of the business must be
continuously running. The problem in hiring of new employee for the new branch it's very easy
when the branch is finished. Also the partners maybe a manager in some instance. However, As
alternative solution to the given problem, and there is no choose is bank loan. As to the time
and benefits bank loan maybe a substitute solution to problem to continue the plan.

VI. External Sourcing

Sourses:

https://www.businessknowhow.com/startup/partnership.htm

https://accountlearning.com/rights-of-partners-in-a-business-partnership/

https://www.upcounsel.com/corporation-pros-and-cons

https://corporations.uslegal.com/shareholder-rights/

https://www.ccu.edu/blogs/cags/2017/06/10-characteristics-of-an-effective-manager/