Business 101 Unit 6

A franchiser can offer a franchisee?

A template for the business.

What occurs when one company purchases and absorbs another company?

Acquisition

You are thinking about starting your own business. What are the most important factors you should consider when thinking about your form of business ownership?

Cost of start-up, taxation, and risk tolerance.

When two companies combine to form a new company, it is called?

Merger

Acquisitions and mergers can help a company *blank* competition.

Reduce

If the owner of a sole proprietorship were to die, what would become of his or her business?

The business would cease to exist.

The typical fee structure for a franchise, including initial franchise fees and royalties, is more advantageous to?

The franchisor

What best describes a limited liability company (LLC)?

A business structure that is attractive to small business owners because it provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.

Acquisitions usually refer to?

A larger company purchasing a smaller one.

After a merger, one of the companies *blank*

Ceases to exist.

Before buying a franchise, what should an entrepreneur research?

Contracts, All existing reports, & Company rules & regulations.

In a *blank*, shareholders can only be held accountable for their investments in company stock.

Corporation

What is a legal entity completely separate from the entities that own it?

Corporation

Companies in what field are more likely to sell franchises than companies in other fields?

Customer Service

What statement best explains why it is important to understand and consider tax implications when starting business?

Different forms of business ownership result in businesses and owners being taxed differently.

One advantage of a sole proprietorship is what?

Easy tax preparation

Cost of start-up, control versus responsibility, profits, taxation, entrepreneurial ability, risk tolerance, financing, and continuity or transferability are all?

Factors to consider when choosing an organizational type.

True or False: A sole proprietor needs to create a separate name for his or her business.

False

True or False: All franchises cost the same to purchase.

False

When you buy a franchise, you have to what?

Follow the franchisee's rules.

In a *blank* partnership, profits, liability, and management duties are divided evenly among the partners.

General

A *blank* merger takes place between two companies in the same marketplace.

Horizontal

Charter Communications is seeking to purchase and bring together Time Warner Cable and Bright House Networks, creating a company that will serve a collective 18.8 million internet broadband subscribers and 17 million tv subscribers. Charter has cited a desire to have greater bargaining power in negotiating with channel owners like Disney. This is an example of?

Horizontal Merger

What is the main difference between an S Corporation and a C Corporation?

In an S Corporation, the business itself is not taxed; in a C Corporation, it is.

What statement best describes the advantage of a franchise?

It provides a proven product, business model, and brand tot he franchisee.

Another term for business organizational types is?

Legal structures

What statement accurately describes a partnership?

A single business in which two or more people share ownership.

Which statement best explains why a sole proprietorship has the lowest setup costs of any business type?

A sole proprietor does not have to hire a corporate attorney to draft legal documents.

Buying a franchise offers less *blank* than buying a business

Control

One disadvantage of a franchise is?

The high cost of start-up

What statement best describes a limited liability partnership (LLP)?

The partners can manage the company directly.

A microbrewer has decided to expand into brewing hard cider. She decides to consolidate with a local orchard that grows apples she can use to make her cider. This is an example of what?

Vertical Merger

a thirty-five year old entrepreneur with dependents is considering starting a business. She is concerned about protecting her personal assets and ensuring that if her company fails, she would not lose her home or personal savings. This is an example of an individual with?

Low risk tolerance.

In a partnership:

Profit, liability, and management duties are divided equally among partners.

What are some important factors to consider when choosing an organizational type?

Risk tolerance and control versus responsibility

You are forming a new company that delivers food to students across college campuses. You have a number of partners, but your primary goals are to avoid personal liability and double taxation. You want to pay each of the partners based on the percentage of the company he or she owns. You could accomplish this by forming what?

S Corporation

If a business owner is more concerned about personal control than about business continuity, he or she might consider what?

Sole Proprietorship

True or False: A business can be a single person offering a product or service.

True

True or False: A company's legal structure determines how much of the profits must be shared.

True

True or False: Someone with an appealing product or service to sell may not have the entrepreneurial skills to run a successful business.

True

Klucky Farms merges with supermarket giant Super Fresh Foods. Klucky Farms is excited to be able to supply Super Fresh Foods with a steady supply of quality chicken, and Super Fresh Foods is glad to have a reliable farm with fair prices under the same corporate leadership. This is an example of?

Vertical Merger

In a sole proprietorship, the owner of the business?

enjoys complete control over all aspects of the business.

The owner of a sole proprietorship is entitled to all of the business' what?

profits