Mary Smith owns and manages a sole proprietorship business making candles that she sells at craft fairs and local gift shops. She has a friend, Jane Doe, who also has a sole proprietorship business making and selling scented soaps. The friends decide that they could expand their businesses by forming a partnership and working together. Up to this point each has been working out of her own home, but they now want to expand into a combined production and office facility. A mutual friend, Suzie Rich, believes that the expanded business would be successful selling online and in high end department stores. She wants to invest cash in the business but does not have the time or experience to help manage the business.

1. What are the advantages and disadvantages to each of these parties of forming a partnership?

2. What type of partnership do you think they should create? Why?

3. What issues should they consider when writing a partnership agreement?