Business Intro Chapter 5 How to form a business

When 2 firms operating in different stages of related business join, it is called a(n) (Blank) merger

Vertical

Sole proprietorship far outnumber (Blank) and (Blank), but they net far fewer sales and less income.

(Corporations) and (Partnerships)

What are some of the disadvantages of a corporation?

-2X taxation -Cost of forming a corporation

Among the questions to ask before franchising internationally is:

-Can you support global partners? -Will your intellectual property be protected? -Are you able to adapt to franchise regulations in other countries?

Among the reasons that disagreements can ruin a partnerships are:

-Disagreement over workload -Opposing management styles -arguments over dividing profits

Ending a partnership can be difficult because of problems deciding:

-How to distribute assets -When a partner can retire -The worth of a retiring partner's share

LLCs do have to submit articles of organization and an operating agreement, but do not have to:

-Keep minutes -file written resolutions -hold annual meetings

Select the disadvantages of a sole proprietorship:

-Limited financial resources -unlimited liability

Home-based franchises have many advantages, such as:

-Low overhead expenses -relief from the stress of commuting

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:

-Paid sick or vacation leave time -a personal plan -paid health insurance

Select ways an LLP deals with liability for partners

-Partners are not held liable for each others' action -When a partner is sued individually for malpractice, it does not affect other partners -Liability is limited to losing only personal assets directly related to personal acts

The advantages of home-based work include:

-Relief from commuting stress -low overhead expenses

An advantage of starting an online franchise is that:

-franchise pay only a set monthly fee -no upfront fee may be required -online franchisees can complete in world markets

The attributes of a corporation include that:

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

what are some of the advantages of a corporation?

-limited liability -ability to raise more money for investment

In order to protect the brand name and image, the franchisor often has:

-required marketing programs -high standards -tight management controls

When choosing to form a partnership, a business owner should consider all of the following:

-the level of participation of each partner -a partner's level of expertise in different areas of business -the financial contribution of each partner

Rank the order in which members of a corporation are chosen in order to separate ownership from management.

1.) Owners/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

Rank the form of business ownership based on ease of starting.

1.)Sole proprietorship 2.)partnership 3.)Corporation

A franchise can be formed

As a corporation, partnership or sole proprietorship

In a leveraged buyout, the managers of a firm, its employees, or other investors

Borrow funds to buy out the firm's stockholders.

In a Leveraged buyout, employees, managers, or investors finance the purchase of the company by (Blank)

Borrowing against its assests

The actions of a fellow franchisee will affect your franchise. This is known as the (Blank)(Blank)

Coattail effect

The joining of firms in completely unrelated industries is a(n) (Blank) merger

Conglomerate

When producers, consumers, or workers with similar needs pool their resources for mutual gain, they start a(n)

Cooperative

Increasing the economic power of others and not paying the same taxes are both advantages of (Blank)

Cooperatives

A state-charted legal entity with authority to act and have liability separate from its owner is a(Blank)

Corporation

A legal entity with authority to act and have liability apart from it's owners is a (Blank)

Corportation

The initial goal of a(n) (Blank) cooperative was to join together to get better prices for their food products

Farm

An investor concerned about failure should consider purchasing a(n) (Blank) due to the lower failure rate as compared to other business ventures.

Franchise

The right to use a specific business' name and sell it's products or services in a given territory is a(n) (Blank) agreement

Franchise

A(n) (Blank) is an arrangement whereby someone with a proven idea for a business sells the right to use the business model, to sell a product or service to others in a given territory

Franchise agreement

A partnership where all owners share in operating the business and in assuming unlimited liability for the business's debts is a:

General partnership

The joining of 2 firm in the same industry is a(n) (Blank) merger

Horizontal

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

LLC

Sole proprietors can leave their business to their heirs. This is called (Blank)

Leaving a Legacy

A (Blank) (Blank) can be initiated by employees, managers, or investors who borrow necessary funds to purchase all share of a firm's stock

Leverage Buyout

Limited liability, choice of taxation, flexible ownership rules, and operating flexibility are all advantages of a(n) (Blank) (Blank) company

Limited liability

Stockholders' liability for losses only up to the amount they invest is called (Blank)

Limited liability

When the continued operation of the business is dependent on the life of the business owner, it is referred to as (Blank)

Limited life span

Taryn and Eilysh have decided to form a partnership. Taryn will not have management responibility, but will invest money in the business. Taryn will be considered a(n)

Limited partner

The limited partners' risk of losing their personal assets in an LLP is:

Limited to the outcomes of their own acts and omissions

The (Blank) limited partnership looks much like a corporation in that it acts like a corporation and is traded on a stock exchange.

Master

The result of 2 firms joining to form one is called a(n) (Blank)

Merger

About 20% of franchises are owned by African Americans, Latinos, Asians, and Native Americans, Franchisors are becoming more focused on recruiting (Blank) franchisees.

Minority

Since many customers of franchises are minorities, franchisors are actively recruiting (Blank) franchisees.

Minority

Corporations shield their stockholders from unlimited liability and allow them to share and allow them to share in the

Profits generated by the firm

A unique gov't creation that looks like a corporation but is taxed like a sole proprietorship or partnership is called a(n) (Blank) corporation.

S

Studies have indicated that partnerships are 4 times more likely to succeed than:

Sole propiertorships

Ease of formation, is an advantages of a(n) (Blank)

Sole proprietorship

One important consideration when prospecting for a good franchise business is (Blank)

The market potential for the product or service, at the prices you need to charge

Many franchises are expanding internationally because:

There are large new markets avaible

Elements such as common ownerships, shared management, and shared profits and losses are those used to define the:

Uniform Partnership Act (UPA)

A (Blank) merger unites firms at different stages of related business

Vertical

Corporation

a company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.

1 company's purchase of the property and obligations of another company is a(n) (Blank)

acquisition

A partnership (Blank) can spell out the requirements of terminating a partnership

agreement

In addition to the articles of incorporation, a corporation has (Blank), which describe how the firm is to be operated from both legal and managerial points of view

bylaws

In the rural ares electrical power is often sold by (blank) that take advantage of the government's policy to sell them electricity at wholesale rates.

cooperatives

The (Blank) form of business allows people to become owners without having to work at the firm.

coporate

A corporation is a legal (Blank) with authority to act and have liability separate from its owners.

entity

Advantages of international franchising include:

expanding customer base

Franchisors may send reverse royalties to franchisees who

feel their sales have been hurt by the franchisor's online sales

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

general partner

When 2 firms which do not participate in the same industries, for example, a software company and a fast food restaurant company, decide to merge, the result is called a (Blank) merger

horizontal

A limited liability partnership limits the liability of limited partners to their:

initial investment

A master limited partnership looks much like a corporation because it:

is traded on the stock exchange

A (Blank) partnership has partners who do not share in operating the business

limited

The (Blank) partnership ensures that the limited partners' personal assets are not at risk.

limited liability

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

limited partner

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

markets

A (Blank) is 2 firms combining to form 1 company

merger

Franchisors would like their franchisees to "mirror" their customer bases. Therefore, many franchisors, such as Domino's Pizza, have developed franchisee recruitment initiatives for (Blank)

minorities

When 2 or more people legally agree to become co-owners of a business, the organization is called a(n)

partnership

LLC members must pay (Blank)-(Blank) taxes such as Medicare and Social Security, which are taxes paid by sole proprietors and partnerships on their profits.

self-employment

A corporation allows people to own (Blank) and share in the profits of the firm

stock

Gathering leads on a company website, selling products and keeping up to date on news via email, and chat rooms all serve as examples of using (Blank) to assist franchisees and customers.

technology