Quiz 5

What are the two major types of partners?

General and Limited Partner

What are the two major types of partnerships?

General and limited partnership

Partnership

is a legal form of business with two or more co-owners.

What is DiversityFran?

is an initiative to build awareness of franchising opportunities within minority communities.

Over (*)% of franchises are minority-owned

30

Sole Proprietorship

A business owned, and usually managed, by one person. This is the most common form of business ownership.

Corporation

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

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.

Conventional (C) Corporation

A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).

S Corporation

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

Franchise Agreement

An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise) to others (franchisees) in a given territory.

Leveraged Buyout (LBO)

An attempt by employees, management or a group of investors to buy out the stockholders in a company.

General Partner

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

Limited Partner

An owner who invests money in the business, but does not have management responsibilities, or liability for losses beyond the investment.

Unlimited Liability

Any debts or damages incurred by the business are your debts, even if it means selling your home, car or anything else.

What are some major benefits of Sole Proprietorship?

Being your own boss, pride of ownership, leaving a legacy

Cooperatives

Businesses owned and controlled by the people who use them- producers, consumers, or workers with similar needs who pool their resources for mutual gain.

Which country is the most popular target for U.S. - based franchises

Canada

Which other countries are becoming popular despite high cost?

China, South Africa, Philippines, Middle east

What is an example of a cooperative?

FARM COOPS - buy fertilizers, equipment, seedsLand 'O' Lakes, ACE hardware, True Value

What are some qualifications for S corporations?

Have no more than 100 shareholders, shareholders have to be permanent residents of the U.S., Derive no more than 25% of income from passive sources.

What are some disadvantages of corporations?

Initial cost, double taxation, two tax returns

What are some disadvantages to home-based franchises?

Isolation, long hours

What are some disadvantages to franchising?

Large start-up costs, shared profit, fraudulent franchisors

What is another form (aside from the two major ones) of partnership?

Limited Liability Partnership

What are some disadvantages of Sole Proprietorship?

Limited financial resources, overwhelming time commitment, unlimited liability

What are some advantages of corporations?

Limited liability, size (expansions), ability to raise more money

Limited Liability Partnership

Limits partners' risk of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision.

What are some advantages to partnerships?

More financial resources, shared management, skills, and knowledge.

Acquisition

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

What are some advantages to franchising?

Personal ownership, nationally recognized name, lower failure rate

What are some advantages to home-based franchises?

Relief from commuting stress, extra family time, low overhead expenses

What are some disadvantages to an LLC?

Self-employment taxes, fewer incentives (fringe), no stock (nontransferable), paperwork

Limited Liability Company (LLC)

Similar to an S corporation, but without the eligibility requirements.

T or F / If you are a limited partner in an LLP, you can operate without fear that one of you partners might commit an act of malpractice resulting in a judgement that takes away your personal assets (house, car, savings, etc.)

T

T or F / More women are becoming franchisors

T

T or F / Most brick-and-mortar franchises have expanded online.

T

Conglomerate Merger

The joining of firms in completely unrelated industries. (soft drink company buys snack food company)

Vertical Merger

The joining of two firms in different stages of related businesses. (Soft drink company and artificial sweetener maker ) - strengthen quality and supply

Horizontal Merger

The joining of two firms in the same industry. (soft drink company buys water company) - diversify and/or expand

Merger

The result of two firms joining to form one company.

Partnership

Two or more people legally agree to become co-owners of a business.

What are some disadvantages to partnerships?

Unlimited liability, division of profits, disagreements among partners.

Quasi-public corporations

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

Professional corporations

are owned by those who offer professional services.

Foreign corporations

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 (or not-for-profit) corporations

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.

What are some advantages to an LLC?

limited liability, choice of taxation, operation flexibility

Limited Liability

means that liability for the debts of the business is limited to the amount the limited partner puts into the company; personal assets are not at risk.

Multinational corporations

operate in several countries.

Brick-and-mortar

relating to or being a traditional business serving customers in a building as contrasted to an online business

Sometimes "*" are sent to franchisees who believe their sales were hurt by the franchisor's site.

reverse royalties

Open (public) corporations

sell stock to the general public.

What are the three types of Mergers?

vertical, horizontal, conglomerate

When picking your partner, you want to ask yourself some questions such as;

•Do you share the same goals? •Do you trust each other? •Do you share the same vision for the company?