8 Economics

Question 1

<> Franchisor controls decisions and operations
<> Paying ongoing fees to the franchisor.
<> Profit must shared with franchisor.

Answer 1

Franchise Disadvantages.

Question 2

<>Unlimited liability
<> Owner suffers all losses
<> Difficult to take holidays or leave.

Answer 2

Sole trader disadvantages

Question 3

Limited liability - members are limited to the value of their investment for business debts.

Answer 3

Cooperative Liability of owners.

Question 4

A business owned and operated by 2 to 20 partners.

Answer 4

Partnership Descriptions

Question 5

Unlimited liability - the partners are jointly responsible for business debts. Their personal assets may need to be sold in order to meet outstanding business debts.

Answer 5

Partnership liability of owners.

Question 6

A business which has at least 5 members with shared management and equal voting rights. It is a separate legal entity.

Answer 6

Cooperative Description.

Question 7

A business which has a separate legal entity from its shareholders. A public company has a minimum of 1 shareholder. A proprietary (Private) company has 1-50.

Answer 7

Company Description.

Question 8

Depends on if the franchise is set up as a sole trader, partnership, or company.

Answer 8

Franchise Liability of owner.

Question 9

<> Simple and inexpensive to set up.
<> Partners bring more money and skills
<> Share of losses.

Answer 9

Partnership Advantages.

Question 10

<> Inexpensive to register
<> Equal voting rights
<> Limited liability
<> No minimum age limit of members

Answer 10

Cooperative Advantages.

Question 11

<> Simplest and cheapest to establish
<> Owner has control over all decisions
<> Owner keeps all profit
<> Fewer government reporting requirements.

Answer 11

Sole Trader Advantages

Question 12

<> Expensive to set up and operate
<> Complex reporting requirements.

Answer 12

Company Disadvantages.

Question 13

<> Unlimited liability
<> Profits must be shared.
<>Disputes between partners
<> Ceases if a Partner dies or leaves retires.

Answer 13

Partnership disavantages.

Question 14

A business owed and operated by 1 person.

Answer 14

Sole Trader Description

Question 15

Limited Liability - shareholders are limited to there value of their shares for any business debts. No personal assets can be sold.

Answer 15

Company Liability of Owners.

Question 16

<> Minimum of 5 shareholders needed
<> Little to no profit distributed to members.
<> Only one vote each member
<> Ongoing education for members

Answer 16

Cooperative Disadvantages.

Question 17

Unlimited liability - the owner is personally responsible for business debts. Their personal assets may need to be to meet outstanding business debts.

Answer 17

Sole Trader - Liability of owners.

Question 18

<> Established reputation, products or service, and store layout.
<> Advertising and marketing support.
<> Franchisor provides training.

Answer 18

Franchise Advantages

Question 19

<> Limited liability
<> Can raise lots of money through shareholders
<> Unlimited life - change in shareholders doesn’t cease business.
<> Run by board of directors not the shareholders

Answer 19

Company Advantages

Question 20

A business or person (Franchisee) buys the right to use the name, products and services if an existing business.

Answer 20

Franchise Description.