Three (3) personal trainers at an upscale health spa / resort in Rancho Mirage, California, want to start a
health club that specializes in exercise programs for people in the 50+ age range.
The trainers Donna Rinaldi, Rich Evans, and Tammy Booth are convinced that they can profitably operate
their own club. They believe that the growing population in this age range, combined with strong
consumer interest in the health benefits of physical activity for older people, would support the new
venture. In addition to many other decisions, they need to determine the type of business organization
that they want to form: incorporate as a corporation or form a General Partnership or Limited Liability
Company.
They intend on hiring several employees who will work work the front desk answering phones and
setting up personal training appointments. They will also hire other personal trainers as the business
hopefully grows. The customer base will generally be elderly and there may be some body contact
between the trainer and the client as deemed appropriate to show the client technique, movement, etc.
When it comes to organization, none of the trainers are very well organized and they tend to run things
very casual.
They do have some cash to purchase items but it will deplete their savings. They intend on leasing and
purchasing gym equipment, they will have to purchase computers, phones, and other equipment and will
have to remodel their gym. They will be leasing the space where the gym is located.
Rich believes there are more advantages to the corporate form than a general partnership or LLC, but he
has not convinced Donna and Tammy of this. Donna believes a general partnership is the way to go
while Tammy would like to setup an LLC.
The three (3) have come to you, a small-business consulting specialist, seeking information and advice
regarding the appropriate choice of formation for their business. They are considering the general
partnership, LLC, and corporation options.
They generally get along and agree on things but there may h