But Org unit 4

Sole Proprietorship

A business owned by one person

acquisition

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

multinational corporation

operate in several countries

corporate hierarchy

owners/stockholders, board of directors, officers, managers, employees

Unlimited liability

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

Factors of S corporations

- have shareholders, directors, and employees, plus the benefit of limited liability - profits are taxed only as the personal income of the shareholders

Qualifications for S corporations

- no more than 100 shareholders - shareholders that are individuals or estates, citizens or permanant residents of US - only one class of stock - derive no more than 25% of income from passive sources - if the corporation loses S status it cannot operate under it again for at least 5 years

Factors of LBO

- ranged in size from $50 million to $34 billion and have involved everything from small family business to giant corporations - acquisitions are not limited to US buyers

Diversity Fran

-initiative to build awareness of franchising opportunities within minority communities

Disadvantages of franchises

1. Large start-up costs 2. Shared profit 3. Management regulation 4. Coattail effects 5. Restrictions on selling 6. Fraudulent franchisors

Advantages of franchises

1. Management and marketing assistance 2. Personal ownership 3. Nationally recognized name 4. Financial advice and assistance 5. Lower failure rate

Disadvantages of LLCs

1. No stock 2. Limited life span 3. Fewer incentives 4. Taxes 5. Paperwork

Limited liability companies (LLC)

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

General Partnership

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

limited partnership

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

S Corporation

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

Franchising in global markets

Canada is the most popular target for U.S.-based franchises. Franchisors are finding it easier now to move into China, South Africa, the Philippines, and the Middle East. International franchising goes both ways—some foreign franchises have come to the U.S., including Kumon Learning Centers and H&R Block.

Advantages of Sole Proprietorship

Easiest to start Least regulated Single owner keeps all the profits Taxed once as personal income (no special taxes) your own boss pride of ownership leaving a legacy r

Using technology in franchising

Franchisors use technology, including social media, to: Extend their brands Meet the needs of both customers and franchisees Expand their businesses

Disadvantages of a corporation

Initial cost Extensive paperwork Double taxation Two tax returns Size Difficulty of termination Possible conflict with stockholders and board of directors

Home based franchises disadvantages

Isolation long hours

Advantages of a corporation

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

Advantages of LLCs

Limited liability Choice of taxation Flexible ownership rules Flexible distribution of profits and losses Operating flexibility

Advantages of partnership

More financial resources Shared management and pooled/complementary skills and knowledge Longer survival No special taxes

E-commerce in franchising

Most brick-and-mortar franchises have expanded online. Many franchisors prohibit franchisee-sponsored sites because conflicts can erupt. Sometimes "reverse royalties" are sent to franchisees who believe their sales were hurt by the franchisor's site. Other franchises are solely based online.

Home-Based Franchises Advantages:

Relief from commuting stress Extra family time Low overhead expenses

merger

Result of two firms forming oen company

vertical merger

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

Disadvantages of sole proprietorship

Unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth, limited life span

What percentage of women own franchises

Women own about half of U.S. companies, yet ownership of franchises is about 21 percent

Cooperative (co -ops)

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 - members democratically control the business by electing ta board of directors that hired proffessional management

Corporation

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

Partnership

a legal form of business with two or more owners

Conventional corporation (C CORP)

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

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 buyout stockholders in a company

Quasi public corporations

are chartered by the government as an approved monopoly to perform services to the general public.

Professional Corporation

are owned by those who offer professional services

foreign corporation

do business in one state but are chartered in another

Alien corporations

do business in the United States but are chartered (incorporated) in another country.

Domestic corporations

do business in the state in which they are chartered (incorporated)

nonprofit corporation

don't seek personal profit for their owners

Closed (private corporations)

have stock that is held by a few people and isn't available to the general public

Open (public) corporation

sells stock to the general public

Conglomerate merger

the joining of firms in completely unrelated industries

Horizontal merger

the joining of two firms in the same industry

Disadvantages of Partnership

unlimited liability, division of profits, disagreements among partners, difficulty of termination