BUSI 1301 Chapter 5
stock
A corporation can sell ____ stock to anyone who is interested to raise more money for investment
articles of incorporation and bylaws
A corporation is formally formed with
a fellow franchise buys out another franchise
A franchise owner will experience the coattail effect when
low operating costs
A key advantage of a home- based franchise is ______ which can be ongoing. These are the costs associated with rent, utilities, and other fixed costs
double taxation
A major disadvantage of the corporate form deals with the tax situation called
an S corporation
A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships
partnership
An LLC submits a written operating agreement, similar to a _______ agreement, describing how the company is to be operated
partnership or sole proprietorship
An S corporation has the liability protections of a corporation but is taxed like a
are not involved with daily operations
An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors ___
coattail effect
Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as
markets/ consumers
Franchises are expanding internationally to access additional ____ that have new customers and to increase their profit potential
advantages & disadvantages of being a franchise owner
Having a nationally recognized name for your business in a franchise can help with marketing and awareness While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch
unlimited liability
If your company's debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole propietorship called ___
franchise
Many minorities prefer the _______ form of business ownership because it offers business connections and support
finds it easier to start and end the business
One of the most important advantages of the sole proprietor form of ownership is that a business owner __
corportation
Selling shares of stock allows a ____ to raise more money to grow
Advantages of home based franchises
Relief from the stress of commuting Extra time for family activities Low overhead expenses
stock
Shareholders are not liable for the debts of a corporation beyond the money they invest in it by buying company ___
unlimited liability
The disadvantage of sole proprietorships is that any debts or losses incurred by the business are your debts because you and the business are legally one and you have _____
sole proprietorship
The easiest type of business entity to form is a ____
These are delineated in a franchise agreement
The right to use a specific business' name The right to sell a business' products in a given territory
personal
Unlimited liability as it relates to sole proprietorships is the risk of loss of ___________ assets beyond the assets of the business
Extensive paperwork Initial cost Double taxation
What are considered disadvantages of incorporating?
Limited liability Choice of taxation Flexible ownership rules
What are the advantages of the LLC form of organization?
Ability to raise more money for investment Limited liability
What are two advantages of the corporate form of business?
partnerships are more likely to succeed
What can be said about the survival rate of partnerships as compared to sole proprietorships?
limited liability
What is an advantage of the corporate form of business ownership?
cooperative
When producers, consumers, or workers with similar needs pool their resources for mutual gain
They provide personal ownership of a business Some offer financial support to aspiring business owners
Why are franchises attractive to minority populations?
LLC
a company similar to an S corporation but without the special eligibility requirements
corporation
a legal entity with authority to act and have liability separate from its owners
horizontal merger example
a merger between a soft drink company and a mineral water company
vertical merger example
a merger between a soft drink company and an artificial sweetener maker
corporation
a state chartered entity that exists in the eyes of the law and controls risk to the owners of the firm
franchise
an agreement that gives a business the right to use a business's name and sell a product or service in an given area
partnership agreement
can spell out the requirements of terminating a partnership
advantages of limited liability
choice of taxation, flexible ownership rules, and operating flexibility
conventional corportation
corporate liability is separate from owners it is a legal entity it is state chartered
The bylaws of the corporation describe how the firm is to be operated The articles of incorporation are usually filed in the state in which the company will be incorporated
forming a corporation
non-requirements for LLC's
hold annual meetings file written resolutions keep minutes
horizontal merger
joins two firms in the same industry and allows them to diversify or expand their products
vertical merger
joins two firms operating in different stages of related businesses
merger
when two firms join together to form one new company
acquisition
where one company purchases the property and obligations of another
