1
Name any form of ownership
Sole Proprietorship, Cooperative, Corporation, or Franchise
Name the 3 types of corporations
Private, Public, Crown
Name the 2 types of partnerships
General, Limited
Who is the Franchiser?
Franchiser licenses the right to its name, operating procedure, designs, & business expertise to another business; the franchisee.
In what business is there unlimited liability?
Sole proprietorship
Give 3 examples of franchise operations.
McDonald’s, BeaverTails, Pizza Pizza, KFC, PetValu, etc. (it's okay if your answer isn't here. As long as it is a franchise, you are correct)
The motive for operating a co-operative is ___, not profit
Service
A sole proprietorship is a business owned by one person, normally referred to as a _____.
Proprietor
Partnership: is a business operated by ____ or more individuals
Two
Who is a crown corporation owned by?
Provincial or Federal government
Anything of monetary value owned or controlled by a business that will provide future benefit
In a sole proprietorship, the owner has unlimited liability. What does this mean?
The owner is responsible for all debt that the business may experience
Explain at least 2 requirements that must be met before being able to obtain a franchise.
Most basic is the franchise fee, which is paid to the franchiser.
A monthly fee for being part of the franchise family.
Roughly 1% of monthly sales for national and local advertising.
All supplies need to be purchased centrally through the franchiser.
Training period to learn how to do business according to their standards.
Explain how the ownership of a corporation is divided through stocks
The more stocks a person owns = more of the company they have ownership of
What is a dividend?
A sum of money given to a company’s shareholders
Definition of a Manufacturing Business
A Manufacturing business produces a product from materials and provides this product to retailers who then sell it to the consumer.
Definition of a co-operative
A co-operative is a business owned by the workers or by members who buy the products or use the services that the business offers.
Briefly explain the role of a Board of Directors
When shares are sold, and there are a lot of owners in a business, a board of directors is put into place to run the corporation.
Definition of limited liability
They are only responsible for paying back the amount that they invested in the partnership.
Even if the business fails, their personal savings and other assets cannot be used to pay the partnership’s debts.
Definition of stockholder
Individuals who buy shares and become owners of a corporation
If the three types of corporations are private, public, and crown…. Briefly explain what each one entails
→ Private - only a few people control all the share, or stock, and therefore, the business.
→ Public- Raises money by selling shares to thousands of people on the stock exchange.
→ Crown - operated by the provincial or federal government
Two people decide to start a business together and they think a general partnership would be the best decision for them. Unfortunately, their business does not do well and they are bankrupt. Who would the liability fall on? Explain.
The liability would fall on both of them. Even if one owner paid off their half of the business, they would still be responsible for their patterns debts as well.
A business has just been launched using a loan from the bank. The entrepreneur is running a sole proprietorship but doesn’t have enough profitability to pay off the debt, and uses personal savings from government funding when they become a public sector business. Unfortunately, the funds only cover operational expenses, and aren't enough to cover the debt. The government decides to fund a different business offering a public-sector service, and transfers the business to the private sector. Now in more debt than before, and a crashing stock, the owner decides to get an investor who has a forty-nine percent equity stake. If the business becomes a partnership, what does the previous owner qualify as? An owner, or a partner?
The new partner only has a 49% equity stake in the business, so the owner of the sole proprietorship would still have more control over the decisions being made as they are the majority owner, but the partner would still have to be consulted for strategies.
If you were looking to run a business, why would buying a franchise come to your advantage? Disadvantage?
Advantages:
Small business owner with a massive title
Prior business experience is not always necessary
Shorter opening/training time
High chance of success
Franchise owner is their own boss
Disadvantages:
Less privacy
Reputation is easily fractured
Many costs and fees
restrictions/guidelines prevent as much creativity
In a cooperative, explain the difference between dividends that would be received by someone who has invested $5000 worth of goods & services, compared to someone who has purchased $1000 worth of goods & services.
Profits in a cooperative are distributed in accordance with how much each member has spent. Thus, the member who spent $5000 would receive a dividend 5 times as large as the other person.