2.2 Business ownership

Question 1

Sole traders

Answer 1

A business in which one person provides permanent finance and, in return, has full control of the business and is able to keep all of the profits.

Question 2

Unlimited liability

Answer 2

Business owners have full legal responsibility for the debts of the business.

Question 3

Partnership

Answer 3

A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibility.

Question 4

Limited liability

Answer 4

The only liability - or potential loss - a shareholder has, if the company fails, is the shares invested in the company, not the total wealth of the shareholders.

Question 5

Shares

Answer 5

A certificate confirming part - ownership of a company and entitling the shareholder owner to dividends and certain shareholder rights.

Question 6

Cooperatives

Answer 6

A jointly owned business operated by members for their mutual benefit, to produce or distribute goods or services.

Question 7

Franchise

Answer 7

The legal right to use the name, logo, and trading system of an existing successful business.

Question 8

Franchisor

Answer 8

A person or business that sells the right to open stores and sell products or services, using the brand name and brand identity.

Question 9

Franchisee

Answer 9

A person or business that buys the right from the franchiser to operate the franchisee.

Question 10

Joint venture

Answer 10

Two or more businesses agree to work closely together and create separate business divisions to do so.

Question 11

Social enterprises

Answer 11

A business with mainly social objectives reinvests most of its profits into benefiting society rather than maximizing return to others.