Chapter 5 Flashcards
A legal entity with authority to act and have liability apart from its ownership
Cooperation
Any debts or damages incurred by the business are your debts, even if it means selling your home, car or anything else.
Unlimited Liability
Partnership with one or more general partners and one or more limited partners
Limited Partnership
A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).
Conventional Cooperation
One company’s purchase of the property and obligations (debt) of another company.
Acquisition
An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise) to others (franchisees) in a given territory.
Franchise Aggreement
A business that is owned and managed by one person
Sole Proprietor
2 or more individuals are legally involved in business
Partnership
Two firms joining to form one company
Merger
Advantages and Disadvantages of Sole Proprietorship
Advantages: Ease of starting and ending business Being your own boss Pride of Ownership Leaving a legacy
Disadvantages:
Unlimited liability
Limited financial resources
Management/Staffing difficulties
Advantages and Disadvantages of Partnerships
Advantages:
More financial resources
Shared management
Longer survival
Disadvantages:
Unlimited Liability
Division of profits
Disagreements
Advantages and Disadvantages of Conventional Corp.
Advantages: Limited liability Ability to raise more money Size Ease of attracting talented employees
Disadvantages: Initial cost Expensive paperwork Double taxation Size
Advantages of Franchising
Personal ownership
Nationally recognized name
Financial Advantages
Lower Failure Rate
A business owned and controlled by the people who use it—producers, consumers, or workers with similar needs who pool their resources for mutual gain.
Cooperatives
