MGMT 111

Franchise

A business established or operated under an authorization to sell or distribute a company's goods or services in a particular area

Disadvantages of an LLC

Self employment taxes and more paperwork

Which is the easiest form of business to start up? Sole proprietorship, corporation, s corporation or Public corporation

Sole proprietorship

Partnership

a business owned by two or more people

conglomerate merger

a combination of two firms that are in unrelated industries

double taxation

a corporation pays income taxes on its earnings, and when dividends are distributed to stockholders, the stockholders pay taxes a second time on the corporate dividends they receive-they have to pay taxes twice

Disadvantage of franchise

1. Large start-up costs 2. Shared profit 3. Management regulation 4. Coattail effects 5. Restrictions on selling 6. Fraudulent franchisors

Advantages of home based franchises

1. Relief from commuting stress 2. Low overhead costs

Why are franchises good for minority owners

1. Some offer financial support 2. Provide personal ownership

Franchise owner coattail effect

A fellow franchise owner does something that has an impact on growth and profitability

limited liability

A form of business ownership in which the owners are liable only up to the amount of their individual investments.

Advantages of Sole Proprietorship

Ease of start-up and closure Pride of ownership Retention of all profits No special taxes Flexibility of being your own boss

How are LLCs taxed?

Either as a partnership or as a corporation. They can choose

Technology to help franchises

Gathering leads on website, keeping up to date on emails and chat rooms

3 types of partnership

General, limited and master limited

Limited life span

If the sole proprietor dies, is incapacitated, or retires, the business no longer exists (unless it is sold or taken over by the sole proprietor's heirs).

Why are start up costs high for incorporation

Lawyers and accountants are needed to do these kinds of filings

What is an LLC (Limited Liability Company)?

Limited liability company: protects its owners from personal responsibility for its debts or liabilities. It's very similar to an S corporation

When there is one or more general partners and one or more limited partners

Limited partnership

Disadvantages of sole proprietorship

Limited to life of owner Equity capital limited to owner's personal wealth Unlimited liability Difficult to sell ownership interest

advantages of a franchise

Management and marketing assistance Personal ownership Nationally recognized name Financial advice and assistance Lower failure rate

example of franchise

McDonald's

How is distribution of profits and losses distributed in an LLC

Members agree on the percentage to be distributed. It's not always equal

Do LLCs have to keep minutes of hold annual meetings

No

acquisition

One company purchases the property and obligations of another

leaving a legacy

Owners can leave a sole proprietorship business to future generations.

Which has a greater chance of succeeding sole proprietorships or partnerships?

Partnerships

Share of profits or sales paid to the franchiser

Royalties

What kind of taxes do LLC owners have to pay (examples are Medicare and social security)

Self employment taxes

unlimited liability in sole proprietorship

The owner is personally and fully responsible for all losses and debts of the business

unlimited liability

The owner is personally and fully responsible for all losses and debts of the business (sole proprietorships have this?

cooperative

When producers, consumers or workers with similar needs pool their resources for mutual gain

Conventional (C) Corporation

a state-charted legal entity with authority to act and have liability separate from its owners

Leveraged Buyout (LBO)

an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing

Sole Proprietorship

business owned and operated by one person

horizontal merger

combination of two or more firms producing the same kind of product (they are at the same level of business)

limited liability

financial responsibility of business owners only for what they invested in a business

limited partnership

form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business

advantage of partnership over sole proprietorship

greater financial resources - banks are more likely to lend money - risk is spread out between 2 parties

taking a firm private

management or a group of stockholders decides to maintain or in some cases regain control of all of the stock

General Partnership

partnership in which partners share equally in both responsibility and liability

vertical merger

the combination of two or more firms involved in different stages of related businesses

horizontal merger

the joining of two firms in the same industry

merger

when two or more companies join to form a single firm