Business Ownership

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.

Consolidation

A form of business growth in which a corporation acquires many smaller companies.

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."

Product Trade-Name

A franchise arrangement based on an independent sales relationship between a franchisor and franchisee to stock and sell a specific line of goods; also known as dealership or exclusive distributorship.

Business-format franchise

A franchise arrangement in which the franchisee must operate under the trade name of the parent company that provides continuous assistance in setting up and operating the business.

Limited-liability company

Is a corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship.

Expansion

The stage of the business cycle characterized by increased spending and borrowing, increased demand for goods and services, increased employment rates, and decreased interest rates on loans.

Merger

Two individual businesses that combine to form one organization.