Mama Fu’s Noodle House started as a single Pan-Asian restaurant in downtown Atlanta. Founded by entrepreneur Martin Sprock, who expanded the outlet through his franchising company Raving Brands, the restaurant quickly grew from a single eatery to a fast-casual food chain with locations in Arkansas, Florida, Georgia, North Carolina and Texas. However, the rapid growth of the chain led to discontent among the franchisees, who believed that the company had grown too quickly without providing the support, marketing and training promised under franchise agreements. In December 2006, when it was estimated that Mama Fu’s had reached or exceeded approximately 40 restaurants within 24 months, a group of 29 franchisees and investors sued Martin Sprock, Raving Brands and Mama Fu’s, alleging a variety of claims including violations of state contract and franchise law.

The decision to quit a venture is never an easy one for an entrepreneur. When the decision is driven by financial reasons, as is often the case in a troubled economy, it can be tempting to simply walk away under the rationale that no new business means the business is dead. The excitement of new projects or the appeal of a fresh start under a new name can overshadow the headaches associated with a failing business. But as cases like Emily Lane Homeowners Association v. Colonial Development, LLC show, maintaining the shell of a company is an all-too-convenient move that leaves owners vulnerable to lawsuits and liability. The failure to properly wind up affairs may lead to a variety of repercussions.

In 2007, a 23 year-old woman hailed a Greater Houston Transportation cab and asked the driver to take her home. He began to drive toward Kingwood, a suburb outside of Houston where she lived, but ignored her request to make the exit. When the woman threatened to call the police, the driver grabbed her phone and threatened to rape her. She escaped by jumping out of the moving cab. The driver was an ex-convict who had served several prison terms for a number of felonies, including assault. Although the woman survived, she claimed that she suffered from post-traumatic stress syndrome and filed a lawsuit against Yellow Cab, the regional taxi company that employed the driver.

The excitement of launching a business can be as overwhelming as the day-to-day demands of making the new venture work. At the outset, it can be difficult to imagine that a new product, vendor deal or client account could lead to complications that would put your personal assets or, worse yet, the personal assets of your loved ones at risk. This is the kind of nightmare scenario faced by business owner Nicola DiCosola and his wife when an appellate court affirmed a $1.2 million judgment against DiConsola as an individual.

Choosing a business structure is a decision that should be made on the basis of a variety of considerations, including the present and future needs of an organization. There are no one-size-fits-all solutions in this area, since all business structures are associated with unique advantages and limitations. It is advisable to compare and contrast the attributes that are important to your organization and to choose accordingly with the knowledge that the decision, while not permanent, may have long-term ramifications.