Ay Chapter 5

If you buy stock in a corporation and someone gets injured by one of the corporation's products, can you be sued? Why or why not?

stockholders in a corporation have limited liability meaning as owners they are responsible for its losses only up to they amount they invested. The corporation could be sued and forced out-of-business but the stockholder would only lose what he/she invested.

What opportunities are available for starting a global franchise?

successful franchising in global markets offers the same opportunities as win domestic markets. However, franchisors must be careful to adapt to the region where they to expand. McDonald's for example has more than 33,000 restaurants in 119 countries.

What are some of the advantages and disadvantages of partnerships?

the advantages include more financial resources ,shared management and pooled knowledge, and longer survival. The disadvantages include unlimited liability, division of profits, disagreements among partners, and difficulty of termination.

According to the video, which business model is deemed the greatest ever developed?

the franchise system

conglomerate merger

the joining of firms in completely unrelated industries

vertical merger

the joining of two companies involved in different stages of related businesses

horizontal merger

the joining of two firms in the same industry

merger

the result of two firms forming one company .

franchise

the right to use a specific business's name and sell its products or services in a given territory.

Cody Barnett describes starting and managing your own business as

time consuming

If your company debts or damages are solely your responsibilities you could be experiencing the disadvantage associated with owning a sole proprietorship called ...

unlimited liability

The responsibility of the owner of a sole proprietorship for all of the debts of the business is ..

unlimited liability

if a sole proprietor is found negligent of an action, then that person could face...

unlimited liability

A sole partnership has a limited life span unless:

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

Why would unlimited liability be considered a major drawback to sole proprietorships?

it's considered a major drawback because unlimited liability means that sole proprietors must pay all debts and damages caused by their business. They may have to sell houses, cursor other personal possessions to pay business debts.

A ... ..... can be initiated by employees, managers, or investors who borrow necessary funds to purchase all shares of a firm's stock

leveraged buyout

Tre responsibility for a loss only up to the amount invested is...liability.

limited

Why are so many new businesses choosing a limited liability company (LLC) farm of ownership ?

limited liability companies have become a popular way to form a business since all fifty states now recognize LLCs. Some of the advantages of LLCs are: Limited liability choice of taxation (can be taxed as a partnership or corporation), flexible distribution of profit and losses, operating flexibility.

Mackenzie's dream is to open a chain salons. She hopes to attract investors to help finance growth. Having once considered forming a C corporation, Mackenzie wants to have more flexibility about how the new business will be taxed. She also wants to offer investors/owners limited liability.Mackenzie can satisfy her objectives by setting up a(n)

limited liability company

The result of two firms joining to form one is called a(n)..

merger

An LLC submits a written operating agreement, similar to a(n)....agreement, describing how the company is to be operated

partnership

which form of ownership was Domino's in the beginning?

partnership

With respect to taxes, the sole proprietorship ...

pays taxes on the profits of the business, at the owner's personal tax rate.

which aspect of its business is Domino's always willing to adapt in order to ensure it meets the wants and needs of its consumers in all its locations/.

product

if a corporation is formed , then the owners are known as..

shareholders

The....is the most common form of business ownership

sole proprietorship

Studies have indicated that partnership are four times more succeed than:

sole proprietorships

the three types of business ownership include: partnerships, corporations, and..

sole proprietorships

Select the attributes of a corporation

state chartered liability separate from owners legal entity

What is the role of owners (stockholders) in the corporate hierarchy?

stockholders do not have to be employees of the corporation.They are investors who have limited liability. Stockholders elect the board of directors of a company who select the management to control the company.

Rank the order in which members of a corporation are chosen in order to separate ownership from management. Start at the top of the managerial hierarchy .

1. owner/stockholders elect board of directors 2.board of Directors hire officers of the corporation 3. officers hire managers of the corporation 4. managers hire employees

The form of partnership that limits liability to the limited partner's own acts or those of the people they supervise its a:

limited liability partnership

limited liability

the responsibility of a business's owners for losses only up to the amount they invest, limited partners and shareholders have limited liability

unlimited liability

the responsibility of business owners for all of the debts of the business

select the disadvantages of a sole proprietorship

unlimited liability limited financial resources

A merger that joins two companies involved in different but related of an industry is a(n)....merger

vertical

A merger between a soft drink company and an sweetener maker could be considered a(n)..

vertical merger

Franchisor

A company that develops a product concept and sells others the rights to make and sell the products.

general partnership

A partnership in which all owners share in operating the business and in assuming liability for the business's debts.

limited liability partnership (LLP)

A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

what is the biggest advantage of opening a Domino's franchise?

reputation in the market

acquisition

One company's purchase of the property and obligations of another company.

What is a cooperative?

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

Among the advantages of farm cooperatives for their members is that they:

increase economic power. do not pay taxes as corporations do.

An advantage of a sole proprietorship is..

independent decision making

Ending a partnership can be difficult because of problems deciding:

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

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

limited liability company (LLC)

A company similar to an S corporation but without the special eligibility requirements.

Master Limited Partnership (MLP)

A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.

limited partnership

A partnership with one or more general partners and one or more limited partners.

franchisee

A person who buys a franchise

S corporation

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships

general partner

An owner (partner) who has unlimited liability and is active in managing the firm.

Ed has decided to purchase and follow a business format by becoming a franchisee. The franchise agreement he will sign gives him the right to use the business name and sell the products of the firm.

franchise agreement

cooperative (co-op)

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

Sole Proprietorship

a business owned and managed by a single individual

A corporation is defined as..

a chartered legal entity with authority to act apart from its owners

corporation

a legal entity with authority to act have liability separate from its owners

Partnership

a legal form of business with two or more owners

select those items considered fringe benefits that people working for a company are likely to receive, but a sole proprietor has to develop on his own:

a pension plan paid health insurance paid sick or vacation leave time

Conventional (C) Corporation

a state-chartered legal entity with authority to act and have liability separate from its owners

A(n).....is where one company purchases the property and obligations of another.

acquisition

Most people who start businesses in the US are sole proprietors. What are the advantages and disadvantages of sole proprietorships?

advantages : -ease of starting and ending the business. -being your own boss -pride of ownership -leaving a legacy -retention of company profits -no special taxes disadvantages: -unlimited liability-the risk of personal loses. -limited financial resources -management difficulties -overwhelming time commitment -few fringe benefits -limited growth -limited life span

What are the major advantages and disadvantages of incorporating a business?

advantages of incorporating a business include: 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. Disadvantages of incorporating are: initial cost, extensive paperwork, double taxation, two tax returns,size,difficulity to terminate, possible conflict with stockholders and board of directors.

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is:

an S corporation

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 purchase an organization primarily through borrowing

limited partner

an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment

What is the difference between a limited partner and a general partner?

general partners are owners (partners)who have unlimited liability and are active in managing the company . limited partners are owners (partners) who have limited liability and are not active in the company.

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

coattail effect

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

conglomerate merger

What are some of the factors to consider before buying a franchise?

demand, track record, investment ,competition ,training, restrictions, due diligence is critical, review and evaluate the franchisor's FDD with a Qualified Professional , be prepared:sometimes you may need to "Walk away"

What are some of the disadvantages of a corporation?

double taxation cost of forming a corporation

A merger of two firms in the same industry that allows the companies to diversity or expand their products is a(n)

horizontal merger