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what type of business would you call this?


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#1 BlueHeron2525

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Posted 26 February 2013 - 03:56 AM

Persons A and B form business X. They purchase a quantity of a product and accessories. They enter a contract with a client business which rents other types and brands of the same product (without accessories) to the general public. The agreement is that the client business will rent Business X's product with accessories for 3-5 years. Business X and the client will split the gross rental income from the product. Business X will provide marketing services to the client business, by printing and distributing brocheures, and will organize photo contests that requires entrants to rent the product from our client business in order to enter the contest. At the end of the contract, business X will give the product and accessories to the client business as excess marketing materials.

Is Business X a marketing business? If the product is purchased from an authorized dealer of the product does business X need to be liscenced to use the product name and brand in it's marketing campaign? Does the client business need to be liscenced to rent the product? Could business X or the client business be sued by the manufacturer of the product or authorized dealerships with territorial rights granted by the manufacture for renting the product in another dealer's territory? Does giving the product to the client buisiness, after the marketing campaign is concluded, constitute a resale of the product even though the contract states that the consideration (half the rental income) is payment for marketing services rather than payment for the product?

#2 adjusterjack

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Posted 26 February 2013 - 06:51 AM

These are all things that a smart businessman thoroughly researches by hiring attorneys and CPA before forming the business.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#3 pg1067

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Posted 26 February 2013 - 07:43 AM

Is Business X a marketing business?


Based on your statement that "Business X will provide marketing services," the answer is obviously yes, although it appears that Business X does more than simply provide marketing services.


If the product is purchased from an authorized dealer of the product does business X need to be liscenced to use the product name and brand in it's marketing campaign?


No way to know without a lot more information (e.g., specifics about the product and the marketing services, the state where this is happening, etc.).


Does the client business need to be liscenced to rent the product?


No way for us to know.


Could business X or the client business be sued by the manufacturer of the product or authorized dealerships with territorial rights granted by the manufacture for renting the product in another dealer's territory?


Of course. Anyone can sue anyone for anything. If your intent was to ask whether such a suit would be meritorious, then this is basically the same question as the prior two questions.


Does giving the product to the client buisiness, after the marketing campaign is concluded, constitute a resale of the product even though the contract states that the consideration (half the rental income) is payment for marketing services rather than payment for the product?


I have no idea what you mean by "constitute a resale of the product." Presumably, this question relates to some unknown body of law, but you haven't told us what body of law you're concerned with or provided any information that would allow us to determine the applicable law on our own.




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