But Org unit 4
Sole Proprietorship
A business owned by one person
acquisition
One company's purchase of the property and obligations of another company.
multinational corporation
operate in several countries
corporate hierarchy
owners/stockholders, board of directors, officers, managers, employees
Unlimited liability
the responsibility of business owners for all of the debts of the business
Factors of S corporations
- have shareholders, directors, and employees, plus the benefit of limited liability - profits are taxed only as the personal income of the shareholders
Qualifications for S corporations
- no more than 100 shareholders - shareholders that are individuals or estates, citizens or permanant residents of US - only one class of stock - derive no more than 25% of income from passive sources - if the corporation loses S status it cannot operate under it again for at least 5 years
Factors of LBO
- ranged in size from $50 million to $34 billion and have involved everything from small family business to giant corporations - acquisitions are not limited to US buyers
Diversity Fran
-initiative to build awareness of franchising opportunities within minority communities
Disadvantages of franchises
1. Large start-up costs 2. Shared profit 3. Management regulation 4. Coattail effects 5. Restrictions on selling 6. Fraudulent franchisors
Advantages of franchises
1. Management and marketing assistance 2. Personal ownership 3. Nationally recognized name 4. Financial advice and assistance 5. Lower failure rate
Disadvantages of LLCs
1. No stock 2. Limited life span 3. Fewer incentives 4. Taxes 5. Paperwork
Limited liability companies (LLC)
A company similar to an S corporation but without the special eligibility requirements.
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.
S Corporation
A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships
Franchising in global markets
Canada is the most popular target for U.S.-based franchises. 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.
Advantages of Sole Proprietorship
Easiest to start Least regulated Single owner keeps all the profits Taxed once as personal income (no special taxes) your own boss pride of ownership leaving a legacy r
Using technology in franchising
Franchisors use technology, including social media, to: Extend their brands Meet the needs of both customers and franchisees Expand their businesses
Disadvantages of a corporation
Initial cost Extensive paperwork Double taxation Two tax returns Size Difficulty of termination Possible conflict with stockholders and board of directors
Home based franchises disadvantages
Isolation long hours
Advantages of a corporation
Limited liability Ability to raise more money for investment Size Perpetual life Ease of ownership change Ease of attracting talented employees Separation of ownership from management
Advantages of LLCs
Limited liability Choice of taxation Flexible ownership rules Flexible distribution of profits and losses Operating flexibility
Advantages of partnership
More financial resources Shared management and pooled/complementary skills and knowledge Longer survival No special taxes
E-commerce in franchising
Most brick-and-mortar franchises have expanded online. 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.
Home-Based Franchises Advantages:
Relief from commuting stress Extra family time Low overhead expenses
merger
Result of two firms forming oen company
vertical merger
The joining of two companies involved in different stages of related businesses
Disadvantages of sole proprietorship
Unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth, limited life span
What percentage of women own franchises
Women own about half of U.S. companies, yet ownership of franchises is about 21 percent
Cooperative (co -ops)
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 - members democratically control the business by electing ta board of directors that hired proffessional management
Corporation
a legal entity with authority to act and have liability apart from its owners
Partnership
a legal form of business with two or more owners
Conventional corporation (C CORP)
a state-chartered legal entity with authority to act and have liability separate from its owners
franchise agreement
an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory
Leveraged buyout (LBO)
an attempt by employees, management, or a group of investors to buyout stockholders in a company
Quasi public corporations
are chartered by the government as an approved monopoly to perform services to the general public.
Professional Corporation
are owned by those who offer professional services
foreign corporation
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 corporation
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
Open (public) corporation
sells stock to the general public
Conglomerate merger
the joining of firms in completely unrelated industries
Horizontal merger
the joining of two firms in the same industry
Disadvantages of Partnership
unlimited liability, division of profits, disagreements among partners, difficulty of termination