DECA Business Basics (Types of Ownership)

Partnership

A form of business in which two or more people own and operate.

Franchise

Already established, already well known. Rights to use the business name and sell product.

Advantages of Partnership

Co-own business, share responsibilities, may have greater financial resources than just one sole proprietor, share business loans and time commitment

Disadvantages of Co-Operatives

Everyone has the same control, despite how much money they have invested, yet commitment varies based on how much money the person invested. Decision making becomes harder as more people join.

Disadvantages of Franchise

Hire by himself, lack of freedom, costs a lot, lack of control over the business

Sole Proprietorship

It is a business owned and operated by one person. The owner is responsible for all operations and assumes all risks (unlimited liability). Borrowing money from banks may be difficult because they usually require collateral when lending money.

Corporation

Legal entity that exists independently of its owners (shareholders). Same right and obligations as natural person. Elect Board of Directors, Offers, and then Managers to run the company. Can either be public, private, crown, or non-profit.

Advantages of Corporation

Limited liability, shareholders do not operate company, raise funds easier, lower tax rate

Advantages of Co-Operatives

Limited risk, Everyone gets 1 vote, Buy in bulk (savings)

Advantages of Franchise

Locations and famous companies cost more, given support, agreement in a contract, provides packaging etc.

Disadvantages of Corporation

More complicated structures, value changes upon stock market

Co-Operatives

Owned and operated by a group of people with a strong common interest. Start-up funds are shared among members, members own and control business decisions, profits are divided by amount of business person does w/ co-op.

Disadvantages of Sole Proprietorship

Owner is responsible for debts. Funding can be difficult to obtain. Costs and time commitments are high. Owner is responsible for all aspects of business. Owner doesn't have the benefits of a normal employee (fringe benefits).

Advantages of Sole Proprietorship

Owner makes all decisions and is his/her own boss. Owner keeps all of the profits. All financial information is kept a secret. Easy to start/close

Disadvantages of Partnership

Unlimited personal liability for other partners, my have conflicts, profits are shared