Understanding Canadian Business Chapter 6

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sole proprietorship

a business that is owned and usually managed by one person

franchisor

a company that develops a product concept and sells others the right to make and sell the products

articles of incorporation

a legal authorization from the government for a company to use the corporate format

partnership

a legal form of business with two or more owners

franchisee

a person who buys a franchise

general partnership

all owners share in operating the business and in assuming liability for the business's debts

franchise agreement

an arrangement where someone with a good idea sells the rights to sell the business name and sells its G&S in a given territory

leveraged buyout

an attempt to purchase an organization primarily though borrowing

cooperative

an organization that is owned by members and customers who pay an annual membership fee and share in any profits

general partner

an owner who has unlimited liability and is actively managing the firm

limited partner

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

pubic corporation

corporation that has the right to issue shares to the public so its shares may be listed on a stock exchange

partnership agreement

legal documentation that specifies the rights and responsibilities of each partner

limited liability

limited partners and shareholders have...

private corporation

not allowed to issue stock to the public so its shares are not listed limited to 50 or fewer shareholders

acquisition

one company's purchase of the property and obligation of another firm

conglomerate merger

the joining of firms in completely unrelated industries

vertical merger

the joining of two companies involved in different stages of similar business

horizontal merger

the joining of two firms in the same industry

corporate governance

the process and policies that determine how an organization interacts with its stakeholders

unlimited liability

the responsibility of business owners for the ALL debts of the business

liability

the responsibility to pay all normal debts and to pay because of 1. a court order 2. a law 3. performance under a contract 4. damages to a person or property

merger

the result of two firms forming one company

franchise

the right to use a specific business's name and sell its G&S in a given territory

limited partnership

with one or more general partners and one or more limited partners

advantages of a sole proprietorship

1. ease of starting and ending 2. being your own boss 3. pride of ownership 4. retention of company profit 5. no special taxes 6. less regulation

disadvantages of corporations

1. initial costs 2. extensive paperwork 3. double taxation 4. two tax returns 5. size 6. difficulty of termination 7. possible conflict with shareholders

disadvantages of franchises

1. large startup cost 2. shared profits 3. management regulation 4. coattail effects 5. restrictions on selling 6. fraudulent franchisers

advantages of corporations

1. limited liability 2. ability to raise more money for investment 3. size 4. perpetual life 5. ease of ownership change 6. ease of attracting talent 7. separation of ownership and management

advantages of franchises

1. management and marketing assistance 2. personal ownership 3. nationally recognized name 4. financial advice and assistance 5. lower failure rate

advantages of partnerships

1. more financial resources 2. shared management and skills 3. longer survival 4. shared risk 5. no special taxes 6. less regulation

disadvantages of partnerships

1. unlimited liability 2. division of profits 3. disagreements 4. difficulty of termination 5. possibly pay higher taxes

disadvantages of sole proprietorship

1. unlimited liability 2. limited resources 3. management difficulties 4. overwhelming commitment 5. few fringe benefits 6. limited growth 7. limited lifespan 8. possibly pay higher taxes


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