# 2 Business and Corporate compliance

 

Felicia makes fabulous fried foods that she sells to family and friends. Felicia’s friend, Fergus, is interested in selling her fried foods using the name “Felicia’s Fabulous Food Company.” Felicia is flattered but does not have enough time to fry any more foods; so Felicia charges Fergus $125,000 to allow Fergus to use her recipes and market the food using her name. On March 10, 2001, Fergus and Felicia enter into a written agreement that provides:
1. Felicia will market and advertise the fried foods.

2. All food is to be prepared with no deviation from Felicia’s recipes.
3. Fergus will manage sales and accounts receivables.

4. Felicia and Fergus will each pay 50 percent of the expenses of the business, such as electricity, water, telephone, heat, insurance and advertising.
5. Felicia will keep two-thirds of the gross receipts and Fergus one-third.

Ten years later, Fergus and Felicia had a number of disagreements and Fergus decides to leave the business. At the time, the business’s net worth was $857,000. Felicia argues that she owns the business and that Fergus, if not an employee, was no more than a franchisee. Fergus argues that he is Felicia’s partner. Were Felicia and Fergus partners? Explain and discuss the factors that lead to your conclusion.