Quiz 5
What are the two major types of partners?
General and Limited Partner
What are the two major types of partnerships?
General and limited partnership
Partnership
is a legal form of business with two or more co-owners.
What is DiversityFran?
is an initiative to build awareness of franchising opportunities within minority communities.
Over (*)% of franchises are minority-owned
30
Sole Proprietorship
A business owned, and usually managed, by one person. This is the most common form of business ownership.
Corporation
A legal entity with authority to act and have liability apart from its owners.
General Partnership
A partnership in which all owners share in operating the business and in assuming liability for the business's debts.
Limited Partnership
A partnership with one or more general partners and one or more limited partners.
Conventional (C) Corporation
A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).
S Corporation
A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.
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.
Leveraged Buyout (LBO)
An attempt by employees, management or a group of investors to buy out the stockholders in a company.
General Partner
An owner (partner) who has unlimited liability and is active in managing the firm.
Limited Partner
An owner who invests money in the business, but does not have management responsibilities, or liability for losses beyond the investment.
Unlimited Liability
Any debts or damages incurred by the business are your debts, even if it means selling your home, car or anything else.
What are some major benefits of Sole Proprietorship?
Being your own boss, pride of ownership, leaving a legacy
Cooperatives
Businesses owned and controlled by the people who use them- producers, consumers, or workers with similar needs who pool their resources for mutual gain.
Which country is the most popular target for U.S. - based franchises
Canada
Which other countries are becoming popular despite high cost?
China, South Africa, Philippines, Middle east
What is an example of a cooperative?
FARM COOPS - buy fertilizers, equipment, seedsLand 'O' Lakes, ACE hardware, True Value
What are some qualifications for S corporations?
Have no more than 100 shareholders, shareholders have to be permanent residents of the U.S., Derive no more than 25% of income from passive sources.
What are some disadvantages of corporations?
Initial cost, double taxation, two tax returns
What are some disadvantages to home-based franchises?
Isolation, long hours
What are some disadvantages to franchising?
Large start-up costs, shared profit, fraudulent franchisors
What is another form (aside from the two major ones) of partnership?
Limited Liability Partnership
What are some disadvantages of Sole Proprietorship?
Limited financial resources, overwhelming time commitment, unlimited liability
What are some advantages of corporations?
Limited liability, size (expansions), ability to raise more money
Limited Liability Partnership
Limits partners' risk of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision.
What are some advantages to partnerships?
More financial resources, shared management, skills, and knowledge.
Acquisition
One company's purchase of the property and obligations of another company.
What are some advantages to franchising?
Personal ownership, nationally recognized name, lower failure rate
What are some advantages to home-based franchises?
Relief from commuting stress, extra family time, low overhead expenses
What are some disadvantages to an LLC?
Self-employment taxes, fewer incentives (fringe), no stock (nontransferable), paperwork
Limited Liability Company (LLC)
Similar to an S corporation, but without the eligibility requirements.
T or F / If you are a limited partner in an LLP, you can operate without fear that one of you partners might commit an act of malpractice resulting in a judgement that takes away your personal assets (house, car, savings, etc.)
T
T or F / More women are becoming franchisors
T
T or F / Most brick-and-mortar franchises have expanded online.
T
Conglomerate Merger
The joining of firms in completely unrelated industries. (soft drink company buys snack food company)
Vertical Merger
The joining of two firms in different stages of related businesses. (Soft drink company and artificial sweetener maker ) - strengthen quality and supply
Horizontal Merger
The joining of two firms in the same industry. (soft drink company buys water company) - diversify and/or expand
Merger
The result of two firms joining to form one company.
Partnership
Two or more people legally agree to become co-owners of a business.
What are some disadvantages to partnerships?
Unlimited liability, division of profits, disagreements among partners.
Quasi-public corporations
are chartered by the government as an approved monopoly to perform services to the general public.
Professional corporations
are owned by those who offer professional services.
Foreign corporations
do business in one state but are chartered in another.
Alien corporations
do business in the United States but are chartered (incorporated) in another country.
Domestic corporations
do business in the state in which they are chartered (incorporated).
Nonprofit (or not-for-profit) corporations
don't seek personal profit for their owners.
Closed (private) corporations
have stock that is held by a few people and isn't available to the general public.
What are some advantages to an LLC?
limited liability, choice of taxation, operation flexibility
Limited Liability
means that liability for the debts of the business is limited to the amount the limited partner puts into the company; personal assets are not at risk.
Multinational corporations
operate in several countries.
Brick-and-mortar
relating to or being a traditional business serving customers in a building as contrasted to an online business
Sometimes "*" are sent to franchisees who believe their sales were hurt by the franchisor's site.
reverse royalties
Open (public) corporations
sell stock to the general public.
What are the three types of Mergers?
vertical, horizontal, conglomerate
When picking your partner, you want to ask yourself some questions such as;
•Do you share the same goals? •Do you trust each other? •Do you share the same vision for the company?