Understanding Canadian Business Chapter 6
sole proprietorship
a business that is owned and usually managed by one person
franchisor
a company that develops a product concept and sells others the right to make and sell the products
articles of incorporation
a legal authorization from the government for a company to use the corporate format
partnership
a legal form of business with two or more owners
franchisee
a person who buys a franchise
general partnership
all owners share in operating the business and in assuming liability for the business's debts
franchise agreement
an arrangement where someone with a good idea sells the rights to sell the business name and sells its G&S in a given territory
leveraged buyout
an attempt to purchase an organization primarily though borrowing
cooperative
an organization that is owned by members and customers who pay an annual membership fee and share in any profits
general partner
an owner who has unlimited liability and is actively managing the firm
limited partner
an owner who invests money in the firm but does not have any management responsibility or liability for loss beyond the investment
pubic corporation
corporation that has the right to issue shares to the public so its shares may be listed on a stock exchange
partnership agreement
legal documentation that specifies the rights and responsibilities of each partner
limited liability
limited partners and shareholders have...
private corporation
not allowed to issue stock to the public so its shares are not listed limited to 50 or fewer shareholders
acquisition
one company's purchase of the property and obligation of another firm
conglomerate merger
the joining of firms in completely unrelated industries
vertical merger
the joining of two companies involved in different stages of similar business
horizontal merger
the joining of two firms in the same industry
corporate governance
the process and policies that determine how an organization interacts with its stakeholders
unlimited liability
the responsibility of business owners for the ALL debts of the business
liability
the responsibility to pay all normal debts and to pay because of 1. a court order 2. a law 3. performance under a contract 4. damages to a person or property
merger
the result of two firms forming one company
franchise
the right to use a specific business's name and sell its G&S in a given territory
limited partnership
with one or more general partners and one or more limited partners
advantages of a sole proprietorship
1. ease of starting and ending 2. being your own boss 3. pride of ownership 4. retention of company profit 5. no special taxes 6. less regulation
disadvantages of corporations
1. initial costs 2. extensive paperwork 3. double taxation 4. two tax returns 5. size 6. difficulty of termination 7. possible conflict with shareholders
disadvantages of franchises
1. large startup cost 2. shared profits 3. management regulation 4. coattail effects 5. restrictions on selling 6. fraudulent franchisers
advantages of corporations
1. limited liability 2. ability to raise more money for investment 3. size 4. perpetual life 5. ease of ownership change 6. ease of attracting talent 7. separation of ownership and management
advantages of franchises
1. management and marketing assistance 2. personal ownership 3. nationally recognized name 4. financial advice and assistance 5. lower failure rate
advantages of partnerships
1. more financial resources 2. shared management and skills 3. longer survival 4. shared risk 5. no special taxes 6. less regulation
disadvantages of partnerships
1. unlimited liability 2. division of profits 3. disagreements 4. difficulty of termination 5. possibly pay higher taxes
disadvantages of sole proprietorship
1. unlimited liability 2. limited resources 3. management difficulties 4. overwhelming commitment 5. few fringe benefits 6. limited growth 7. limited lifespan 8. possibly pay higher taxes