CH 5

Rank the forms of business ownership based on ease of starting. Put the easiest form at the top.

1 Sole proprietorship 2 partnership 3 corporation

Corporation

a legal entity with authority to act and have liability apart from its owners. The almost 5 million corporations in the United States make up only 20 percent of all businesses, but they earn 81 percent of total U.S. business receipts

The fastest way for a foreign firm to enter the us market may be to _ the operations of a us company

buy

The actions of a fellow franchisee will affect your franchise. This is known as the _ _.

coattail effect What happens to your franchise if fellow franchisees fail? The actions of other franchises have an impact on your future growth and profitability. Due to this coattail effect, you could be forced out of business even if your particular franchise has been profitable. For example, the customer passion for high-flying franchisor Krispy Kreme sank as the market became flooded with new stores and the availability of the product at retail locations caused overexposure. McDonald's and Subway franchisees complain that due to the company's relentless growth, some new stores have taken business away from existing locations, squeezing franchisees' profits per outlet.

the uniform partnership act defines three key elements of a general partnership as

common ownership shared profits and losses the right to participate in managing the operations of the business

the higher costs of starting a franchise in international markets are offset by less __ from other companies and a rapidly expanding consumer base

competition

A merger that joins firms in completely unrelated industries is a:

conglomerate merger *unites firms in completely unrelated industries in order to diversify business operations and investments. A soft drink company and a snack food company would form a conglomerate merger.

_ partners participate in operating the business while limited partners do not

general

Relief from the stress of commuting, extra time for family activities, and low overhead expenses are all advantages of

home - based franchises

a master limited partnership looks much like a corporation because it

is traded on the stock exchange

A Sole Proprietorship has a limited life span unless

it is sold to someone else it is taken over by a heir

LLC's do have to submit articles of organization and an operating agreement, but do not have to

keep minutes file written resolutions hold annual meetings

A(n) _ is an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.

leveraged buyout

A _ partnership has partners who do not share in operating the business

limited

limited liability partnership (LLP)

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. If you are a limited partner in an LLP, you can operate without the fear that one of your partners might commit an act of malpractice resulting in a judgment that takes away your house, car, retirement plan, even your collection of vintage Star Wars action figures, as would be the case in a general partnership. However, in many states this personal protection does not extend to contract liabilities such as bank loans, leases, and business debt the partnership takes on; loss of personal assets is still a risk if these are not paid. In states without additional contract liability protections for LLPs, the LLP is in many ways similar to an LLC (discussed later in the chapter).

_ owned business are growing more than the national rate

minority

What are some of the disadvantages of an LLC?

no stock limited life span fewer incentives taxes paperwork

Studies have shown that partnerships are more likely to succeed than

sole proprietorships

Franchises are attracted to minority populations because

some offer financial support to aspiring business owners they provide personal ownership of a business

Many females own franchises, but the recent trend is a decrease in female franchise owners due to the high, intial _ costs associated with franchising.

start-up

Rather than merge assets to sell to another company, a firm is taken private when management, or a group of stockholders, obtain all of the firm's

stock

which of the following is considered a disadvantage of a sole proprietorship

unlimited liability

Ending a partnership can be difficult because of problems deciding:

when a partner can retire how to distribute assets the worth of a retiring partner's share