John and Talia Tindale are in their early 50s, married to each other for 25 years, and have two children: Marie who is 22; and Mark who is 20. They own a house and have no mortgage.

John has worked as a maintenance engineer at a hospital for 25 years and is eligible for early retirement. Talia is a college graduate and has worked full time for five years as the assistant manager of a large, successful garden retail centre.

The Tindales have long dreamed of owning their own lawn/garden maintenance company. This company would provide many services; including lawn cutting and maintenance, hedge and tree trimming, tree and flower planting, and water irrigation installation. The business would operate from March to November. Both Marie and Mark are keenly interested in working for the company on a full time basis.

The business would require the purchase of three trucks, six lawn mowers, six hedge trimmers and numerous other items of machinery. The average life span of most of the equipment is 3 years. The initial capital investment (equipment only) is estimated at $150,000. Marketing initiatives and other first year costs are estimated at $50,000.

In addition, the Tindales have discovered in the local newspaper that there are two existing business of a similar nature for sale. The sale price of each business is $325,000. One business has been in operation for 15 years, the other for 10 years.This price includes all of the required equipment.

The Tindales have found advertisements in the local newspaper for franchise opportunities with an expanding chain called Evergreen Lawn and Maintenance. The franchise fee is $35,000 and royalties are 5% of annual revenues.They would still have to buy the equipment on top of the franchise fee.

Questions:

1. Would you recommend that the Tindales start their business from scratch, buy one of the existing businesses that are listed for sale, or purchase a franchise? Please discuss the reasons for your decision.
2. Which form of legal ownership would you recommend that the Tindales register? Please explain the reasons for your decision.