Chapter 5

an agreement that gives a business the right to use business's and sell a product or service in a given area is a ____

franchise agreement

form a business where all owners will share and operate a business and in assuming liability for business debts is a _____

general liability

joining of two firms in the same industry

horizontal merger

an advantage of sole proprietorship is _________

independent decision making

sole proprietors can leave their business to heirs: this is called _______

leaving a legacy

attempt by employees, managers, investors, who barrow necessary funds to purchase all shares of a firms stock

leveraged buyout

an S corporation has the liability protections of a corporation but is taxed

like a partnership or sole proprietorship

stockholders liability for losses only up to the amount they invest is called _______

limited liability

one company's purchase of the property and obligations of another company

acquisition

legal documents that the creators of a cooperation must file with the appropriate state office are referred to as ____

articles of incorporation

poor publicity at a fellow franchise location u notice sales at your location have decreased this is ___

coattail effects

a _______ is a chartered legal entity with authority to act and have liability separate from its owners

conventional (C) corporation

an LLC submits a written operating agreement similar to a _____ agreement describing how the company is to be operated

partnership agreement

termination of a partnership is difficult without a ______ agreement

partnership agreement

one of the fastest growing franchise sectors is

senior care

a _____________ is the most common form of business ownership

sole proprietorship

a business that is owned and managed by one person

sole proprietorship

the failure rate of a franchise is lower than other business ventures true or false

true

when working for a company a comprehensive benefit plan may add up to 30% or more in workers salary? true or false

true

which of the following is a disadvantage of sole proprietorship?

unlimited liability

popular businesses for franchising

1. automobile collision shops 2. fast food restaurants 3. restraunts

sole proprietorship has an unlimited life span unless

1. it is taken over by a heir 2. it is sold to someone else

the responsibility for a loss only up to the amount invested

limited liability

how can disagreements ruin a partnership

1. opposing management styles 2. disagreement over workload 3. arguing over profits

advantages of franchising

1. recognized name 2. lower failure rate 3. personal ownership

minority businesses grow at more than ___ times the national rate

6

joining of firms in completely unrelated industries

conglomerate merger

when producers, consumers, or workers with similar needs pool resources for mutual gain is called _____

cooperative

a cooperation is a legal ______ with authority with authority to act and have liability separate from its owners

entity

join together to get better prices for their food products

farm cooperative

an investor concerned about failure should consider investing in a ____ due to low failure rate

franchise

Taylor and Heather are doctors in a medical practice. Heather is being sued for malpractice but it will not effect Taylors assets because they formed a _____ _____ partnership

limited liability partnership

Morgan and Tracy have decided to form a partnership. Morgan will not have management responsibility but will invest money in the business. Morgan is considered a _______ partner

limited partner

when two firms join together to form one new company is called a ______

merger

a legal form of business with two or more owners

partnership

stockholders are _______ from the managers and employees of the firm because they are not actively involved in operations of the firm

separate

a merger between a soft drink company and a artificial sweetner maker would be considered a _____ merger

vertical merger

home based franchises have many advantages

1. relief from the stress of commuting 2. extra time for family activities 3. low overhead expenses