Fossil Inc. Clothing and Accessory’s Legal Structure The legal .structure .a .business .chooses depends on the way a business operates. Gray (49) argues that the key function of the legal structure is to determine the paying of taxes, sharing of profits and losses, and where the legal liabilities .rest. Also, it helps to determine the nature of a business relationship with business associates, creditors, investors, and employees. According to Gray (49), there are three options for a business legal .structure. .They include a sole trader or a sole proprietor where a business operates under one person, .and a .partnership .ran by two or more people. .Also, another option is an incorporated company where business activities .are incorporated .into a company, which bestows .life .on business as a separate legal person (Mancuso 4).
The Fossil inc. Clothing and Accessory is a .design, development, marketing and distribution, company that focuses on consumer products predicated on fashion and .value .such as sunglasses, watches, and leather goods among others, for retail sale on an international basis. Fossil Inc. is an incorporated .business .since it .is formed .on a corporation. Incorporating a business provides a liability .protection .and .considerable .tax advantages. The business can .move .on despite the death or bankruptcy of shareholders or .management. Moreover, it offers the best .means .of .expansion .and the provision of .outside .investors.
Fossil Inc. .is under the ownership .of two brothers. Tom and Kosta Kartsotis who own about 30% of Fossil stock. In 1993, the Fossil Inc. sold 20% of the company to investors, but Tom retained 40.5% control over the .company .while his brother retained 18.8% ownership. According to Richardson (1), initial public offering of .stock .(public ownership) yielded $19 million, which Fossil Inc. used half of it to reduce the company’s .debt .and the other half to be kept as working capital. Additionally, in 1993, Fossil Inc. had .several .subsidiaries in Europe, led by Fossil Europe GmbH i.e. the company’s .primary .European .operation .in Germany.
Other subsidiary companies of Fossil Inc. included Fossil Italia SRL and Fossil France SARL, which served as Fossil’s marketing, as well as distribution entities in those countries. .In addition, Fossil B.V., formed in 1993, stood as a company holding for the three European subsidiaries, where Texas-based Fossil Inc. controlled 70 per cent of the newly formed European holding Company (International Directory of Company Histories 1).
In 1994, Fossil Inc. was able to .achieve .strides in each direction via several .notable .developments. These developments included the addition of an .extra .men’s .line .of leather goods, money clips, and scheduling the shipment of leather key fobs among others. In the same year, Fossil Inc. moved into another .substantial .international .market, through signing of an agreement with rival Seiko Corporation (Richardson 1). It gave Seiko the rights to distribute its products in Japan via Fostim, a subsidiary owned and controlled by Seiko, which allowed the .entrance .of Fossil Inc. in Texas into the Japanese market.
In 1995, Fossil Inc. paid $1.7 million in order to increase its ownership in Fossil B.V. to 88%. Moreover, towards the end of 1996, the company had acquired 81% of the Seiko-owned Fostim. Under the control of Seiko, Fostim placed fossil products in more than 180 retail location, in Japan. Therefore, Fossil Inc. can be described as an incorporated business due to the .many .business activities incorporated into the company, which have led to its expansion worldwide.
Gray, Douglas. Start and Run a Profitable Consulting Business. New York: Kogan Page Publishers, 2004. Print.
International Directory of Company Histories. USA: St. James Press, 1997. Web.
Mancuso, Antony. Incorporate Your Business: A Legal Guide to Forming a Corporation in Your
State. San Francisco: Nolo, 2011. Print.
Richardson. Fossil Inc. Annual report, Fossil Inc. 1995. Web.