Business Structure and Liability
What is an unincorporated business?
This type of business does not have a separate legal identity from its owner, meaning the owner is personally liable for all business debts.
What is a private limited company?
This type of limited company typically has a small group of shareholders—often friends or family—and its shares are not available to the general public.
What has keys but can’t open locks?
A piano!
What is a franchise?
This business arrangement allows a person (the franchisee) to operate a business using the name, logo, and proven methods of an established brand for a fee.
What is a joint venture?
This arrangement involves two businesses collaborating to share expertise, costs, and risks for a specific project.
What is an incorporated business?
In this business structure, the company is recognized as a separate legal entity, so owners risk only the money they invested.
What is a public limited company?
This company can raise funds by selling its shares to the general public on a stock exchange.
What has a head and a tail but no body?
A coin!
Name one major advantage a franchisee might have.
A major benefit for a franchisee is that they operate under a well-known name, which lowers the chance of failure.
What is Sony Ericsson?
A well-known example of a joint venture in the technology sector was the collaboration between Sony and this telecommunications company.
What is unlimited liability?
This term describes the legal concept where business owners are personally responsible for all debts and liabilities incurred by the business.
Correct Response:
What is concentrated or majority ownership?
In many private limited companies, one shareholder may own more than 51% of the shares, ensuring that control stays with a small group.
Why did the scarecrow win an award?
Because he was outstanding in his field!
What is a royalty fee?
This fee, usually calculated as a percentage of revenue or profit, is regularly paid by the franchisee to the franchisor.
How is reputation a drawback for joint ventures?
One potential drawback of a joint venture is that a mistake by one partner can damage this important intangible asset.
What is limited liability?
This protective feature limits a shareholder’s loss to only the amount they invested, even if the business fails.
Public limited companies and financial statements, what's the link?
Because of strict legal requirements, this type of company must publish its annual financial statements.
I speak without a mouth and hear without ears. I have no body, but I come alive with the wind. What am I?
An echo!
What is limited autonomy?
A common disadvantage for a franchisee is having limited freedom to make decisions regarding product offerings and store layout due to strict franchisor guidelines.
How is shared expertise a benefit in joint ventures?
This benefit of a joint venture arises when each partner contributes its unique strengths and expertise to the collaboration.
What is separate legal identity?
This characteristic of an incorporated business means it can enter contracts, sue, and be sued independently of its owners.
What are the Articles of Association?
These foundational documents, required during setup, outline the rules of the company and are essential for its operation.
What has hands but can't clap?
A clock!
Who is the franchisor?
In many franchise arrangements, this party finances national advertising campaigns, while local marketing expenses are often handled by the franchisee.
Why do conflicts or managerial disputes happen in joint ventures?
Differences in business cultures or management styles between partners in a joint venture can lead to these types of problems.