BUS101 - Ch.5

Cooperative

A business owned and controlled by the people who use it—producers, consumers, or workers with similar needs who pool their resources for mutual gain.

sole propretorship

A business that is owned and usually managed by one person

Merger

the result. of. two firms merging into one

Home- based franchising advantages

•Relief from commuting stress •Extra family time •Low overhead expenses

Advantages of sp

1. Ease of starting and ending a business 2. being. your own boss 3. pride of ownership 4. leaving a legacy 5. retention of company profits 6. No special taxes

disadvantage of corporation

1. Initial cost 2. extensive paperwork 3. double taxation 4. two tax returns 5.size 6. difficulty. to termine 7. possible conflict. w stock holders

advantages of franchising

1. Management and marketing assistance 2.Personal ownership 3.Nationally recognized name 4.Financial advice and assistance 5. Lower failure rate

Advantage of a corporation

1. limited liability 2. ability to raise money 3. size 4. perpetual life 5. ease of ownership change 6. seperation of ownership from management.

partnership advantages

1. more financial resources 2. Shared management and pooled/complementary skills 3. longer survival 4. no special taxes

partnership disadvantages

1. unlimited liability 2. division of profits 3. disagreements among partners 4. difficulty of termination

Disadvantages of sp

1. unlimited liability 2. limited financial resources 3. management difficulties 4. overwhelming time commitment 5. few fringe benefits 6. limited growth 7. limited life span

disadvantages of franchising

1.Large start-up costs 2.Shared profit 3.Management regulation 4.Coattail effects 5.Restrictions on selling 6.Fraudulent franchisors

partnership

A legal form of business with two or more owners

limited liability partnership

A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

Master limited partnership

A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.

conventional (c) corporations

A state chartered legal entity with authority to act and have a liability separate from its owners (stakeholders)

general partner

AN owner (partner) that has unlimited liability and is active in managing the firm

franchise agreement

An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise) to others (franchisees) in a given territory.

Acquisition

One company's purchase of the property and obligations of another company.

Conglomerate merger

The joining of firms in completely unrelated industries.

vertical merger

The joining of two companies in different stages of related businesses.

limited liability

The responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders have limited liability.

corporation

a legal entity with authority to act and have liability separate from its owners

general partnership

all owners share in operating the business and in assuming liability for business debts

limited partner

an owner who invests money in the business but does not. have any managment responsibility or liability for losses beyond the investment.

limited partnership

has one or more general partners and one or more limited partnerships

horizontal merger

the joining of two firms in the same industry

franchising in global markets

•Franchisors are finding it easier now to move into China, South Africa, the Philippines, and the Middle East. •International franchising goes both ways—some foreign franchises have come to the U.S., including Kumon Learning Centers and H&R Block.

home-based franchising disadvantages

•Isolation •Long hours

E-Commerance franchising

•Many franchisors prohibit franchisee-sponsored sites because conflicts can erupt. •Sometimes " reverse royalties" are sent to franchisees who believe their sales were hurt by the franchisor's site. • Other franchises are solely based online.