BUSI 1301 Chapter 5

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stock

A corporation can sell ____ stock to anyone who is interested to raise more money for investment

articles of incorporation and bylaws

A corporation is formally formed with

a fellow franchise buys out another franchise

A franchise owner will experience the coattail effect when

low operating costs

A key advantage of a home- based franchise is ______ which can be ongoing. These are the costs associated with rent, utilities, and other fixed costs

double taxation

A major disadvantage of the corporate form deals with the tax situation called

an S corporation

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

partnership

An LLC submits a written operating agreement, similar to a _______ agreement, describing how the company is to be operated

partnership or sole proprietorship

An S corporation has the liability protections of a corporation but is taxed like a

are not involved with daily operations

An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors ___

coattail effect

Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as

markets/ consumers

Franchises are expanding internationally to access additional ____ that have new customers and to increase their profit potential

advantages & disadvantages of being a franchise owner

Having a nationally recognized name for your business in a franchise can help with marketing and awareness While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch

unlimited liability

If your company's debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole propietorship called ___

franchise

Many minorities prefer the _______ form of business ownership because it offers business connections and support

finds it easier to start and end the business

One of the most important advantages of the sole proprietor form of ownership is that a business owner __

corportation

Selling shares of stock allows a ____ to raise more money to grow

Advantages of home based franchises

Relief from the stress of commuting Extra time for family activities Low overhead expenses

stock

Shareholders are not liable for the debts of a corporation beyond the money they invest in it by buying company ___

unlimited liability

The disadvantage of sole proprietorships is that any debts or losses incurred by the business are your debts because you and the business are legally one and you have _____

sole proprietorship

The easiest type of business entity to form is a ____

These are delineated in a franchise agreement

The right to use a specific business' name The right to sell a business' products in a given territory

personal

Unlimited liability as it relates to sole proprietorships is the risk of loss of ___________ assets beyond the assets of the business

Extensive paperwork Initial cost Double taxation

What are considered disadvantages of incorporating?

Limited liability Choice of taxation Flexible ownership rules

What are the advantages of the LLC form of organization?

Ability to raise more money for investment Limited liability

What are two advantages of the corporate form of business?

partnerships are more likely to succeed

What can be said about the survival rate of partnerships as compared to sole proprietorships?

limited liability

What is an advantage of the corporate form of business ownership?

cooperative

When producers, consumers, or workers with similar needs pool their resources for mutual gain

They provide personal ownership of a business Some offer financial support to aspiring business owners

Why are franchises attractive to minority populations?

LLC

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

corporation

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

horizontal merger example

a merger between a soft drink company and a mineral water company

vertical merger example

a merger between a soft drink company and an artificial sweetener maker

corporation

a state chartered entity that exists in the eyes of the law and controls risk to the owners of the firm

franchise

an agreement that gives a business the right to use a business's name and sell a product or service in an given area

partnership agreement

can spell out the requirements of terminating a partnership

advantages of limited liability

choice of taxation, flexible ownership rules, and operating flexibility

conventional corportation

corporate liability is separate from owners it is a legal entity it is state chartered

The bylaws of the corporation describe how the firm is to be operated The articles of incorporation are usually filed in the state in which the company will be incorporated

forming a corporation

non-requirements for LLC's

hold annual meetings file written resolutions keep minutes

horizontal merger

joins two firms in the same industry and allows them to diversify or expand their products

vertical merger

joins two firms operating in different stages of related businesses

merger

when two firms join together to form one new company

acquisition

where one company purchases the property and obligations of another


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