Business Ownership Vocabulary

Sole proprietorship

A business owned by one person who receives all the profits from the business and takes all the risks

Franchise

A contractual agreement between a parent company and a franchisee to distribute goods or services

Partnership

A form of business ownership in which the business is owned by two or more persons

Corporation

A form of business ownership that is owned by stockholders who have purchased units or shares of the company; an "artificial being, invisible, intangible, and existing only in contemplation of the law" (U.S. Supreme Court)

Capital

Assets of a business

Profit

Monetary reward a business owner receives for taking the risk involved in investing in a business

Franchisee

One who buys the right to sell the goods or services of the parent company (franchisor)

Unlimited liability

Requirement that business owners be responsible for paying business debt; personal assets can be used to pay the debt

Limited liability:

Restricted chance of loss; a condition in which business owners risk only the amount of their investment