Franchise
How does a franchise work?
Business model where an individual is granted the right to operate a business using the branding and systems of an established company
What are two examples of a corporation?
Examples can be: Amazon, Apple, Walmart, McDonalds, Starbucks
What ice cream company originally started as a partnership, before becoming a corporation?
Ben and Jerry’s
Why are 90% of franchises considered to survive the first five years of operation?
It is due to the support and resources the franchisor provides them.
What’s the name of a very popular coffee corporation started in Seattle?
Starbucks
Do partnerships pay income tax?
No, they do not pay income taxes but "pass through" any profits or losses to their partners.
What is one major benefit of owning a franchise compared to starting an independent business?
Franchisees have access to a proven business and brand recognition, which can reduce the risk of failure
Why is it harder to start and grow a corporation?
They face closer government regulations and are generally expensive and complex to start & operate
Are both people in a partnership taxed together?
No, each partner has to individually taking into account his distributive share of each item of partnership income, gain, deduction, loss, and credit.
What support do franchisors typically provide to their franchisees?
Provide initial training, ongoing operational assistance, marketing support, established supply chain.
Do you have to meet legal requirements by the state to be a corporation?
Yes! You must meet the state's requirements and file the necessary paperwork.
Do partnerships need to reach a formal agreement?
No, a formal agreement between two partners is not legally required, but highly recommended.
What does the franchisee have to do to continue operating the franchisors business?
Maintain brand standards, pay ongoing fees, comply with health and safety laws and protect the brand name.
Are Corporations responsible for paying taxes separately?
Yes, since it is very common for them to have multiple owners.
What is one key advantage of forming a partnership?
It allows for shared resources, skills, and expertise, which can lead to improved decision-making and business growth