Sole Proprietorships
What is a sole proprietorship?
A business entity with a single owner or operator.
What is a partnership?
A legal business owned by two or more people who share management and profits.
What is a limited partnership?
A partnership where some partners are only liable up to their investment.
What is a franchise?
The right or license to market a company’s goods in a certain location.
What is a business entity?
An organization created to conduct business.
What type of liability does a sole proprietor assume?
Unlimited liability for all debts.
What is critical for success in a partnership?
Communication and cooperation.
What does LLC stand for?
Limited Liability Company.
Who is the franchisor?
The parent company that sells the rights to its brand and products.
What is unlimited liability?
Full responsibility for all business debts.
What is one advantage of a sole proprietorship?
Full control of decisions, profits go directly to the owner, or pride in being your own boss.
What happens if one partner cannot cover their share of the business debt?
Other partners must cover it.
What is one benefit of an LLC?
Protects personal assets, easier taxes, fewer regulations, protects brand.
Who is the franchisee?
The local owner who buys the rights to sell the franchisor’s products.
What is a dividend?
A payment of profits distributed to shareholders.
What is one disadvantage of a sole proprietorship?
Owner absorbs all financial losses, difficulty getting loans, high responsibility.
What is an at-will partnership?
An agreement that can be dissolved or modified at any time.
What is a share in an LLC?
A standardized unit of ownership.
What is a royalty in a franchise?
A percentage of monthly sales paid to the parent company.
What is the difference between a sole proprietorship and a partnership in decision-making?
Sole proprietor decides alone; partnership requires agreement among partners.
Give an example of a sole proprietorship in agriculture.
Most farmers who own and operate their farms.
What is a silent partner?
Someone who invests capital but has no input in management decisions.
What is an operating agreement?
A legal document defining rights, responsibilities, and income division in an LLC.
Name one advantage and one disadvantage of owning a franchise
Advantage: national advertising, training, proven success. Disadvantage: high costs, strict rules, royalties.
Why are franchises often more successful than independent small businesses?
They use proven products, marketing, and brand recognition.