How is a corporation different from a sole proprietorship or partnership?

The owners (stockholders) have limited liability.

A corporation has only one or two owners.

A corporation is usually owned by one person.

A corporation requires a legal charter with the state.

What is the definition of UNLIMITED LIABILITY?

A legal obligation on the owners of a business to settle all debts of the business. In law there is no distinction between the assets and debts of the business and the personal assets and debts of the owner.

Owners are not fully liable for the company’s debts : UNLIMITED LIABILITY

What are the main advantages of setting up a partnership?

Shared decision making, Increased capital invested, Increased specialisation

Partners may have disagreements, Limited finance

Profits have to be shared between partners, No continuity of existence

A company that sell shares publicly on the stock market

A company that sells shares privately by inviting potential investors

A company that sell shares publicly on the stock market

What are the advantages of setting up an LTD?

Ownership and control are closely connected, board of directors are often main shareholders, Decisions can be taken more quickly, Limited liability

Loss of individual control, More complicated to set up - legal formalities

What are the disadvantages of setting up an LTD?

Loss of individual control, More complicated to set up - legal formalities

Ownership and control are closely connected, board of directors are often main shareholders, Decisions can be taken more quickly, Limited liability

What are the advantages of setting up an PLC?

Raise large amount of capital from share issue, Benefit from economies of scale, e.g. bulk buying, cheaper borrowing, Limited liability

Become too large resulting in poor labour relations, Conflict of interest between shareholders and the Board of Directors, Possibility of takeover or merger because shares can be bought by anyone

What are the disadvantages of setting up an PLC?

Become too large resulting in poor labour relations, Conflict of interest between shareholders and the Board of Directors, Possibility of takeover or merger because shares can be bought by anyone

Raise large amount of capital from share issue, Benefit from economies of scale, e.g. bulk buying, cheaper borrowing, Limited liability

A franchise is an agreement or license between two parties which gives a person or group of people (the franchisee) the rights to market a product or service using the trademark of another business (the franchisor)

A franchise is an agreement or license between two parties which gives a person or group of people (the franchisee) the rights to own and then market a product or service using the trademark of another business (the franchisor)

What must the franchisee do?

The franchisee must operate in the same way as the franchiser, to produce and sell the goods of the franchiser. The franchisee pays the franchiser for this right

The franchisee can operate in the same way as the franchiser, to produce and sell the goods of the franchiser.

What are the advantages for the franchisee of being in a franchise?

Established name, Support of Franchiser and training, supplies provided, marketing

Lack of total control, no creative freedom, cannot call it their own business

What are the disadvantages for the franchisee of being in a franchise?

Lack of total control, no creative freedom, cannot call it their own business

Established name, Support of Franchiser and training, supplies provided, marketing

What are the advantages for the franchiser of being in a franchise?

Quick way to grow, Royalties from Franchisee

Risk of reputation from unsuitable franchisee

PARTNERSHIP: advantages and disadvantages

Difficulty in transferring ownership

Úinéireacht Gnó

Quiz

•

Business

•

9th - 12th Grade

•

Practice Problem

•

Hard

R Gamble

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Corporation

Franchise

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This type of business is owned by one person.

This type of business is owned by two or more people.

This type of business is a contractual agreement with a parent company to sell its products/services in an area.

This type of business is owned by many people called stockholders.

Nike, Google and Apple are examples of.....

McDonald's and Burger King are examples of....

Advantages of this business type are that the owner is their own boss and gets to keep all the profits.

Disadvantages for this type of business include: owner pays for everything, hard to get money to start from the bank, owner might lack skills & unlimited liability.

Advantages of this business include: easier to get money from the bank to start, share skills and share risks.

Disadvantages of this business type include: needs a partnership agreement, partners might not get along, owners share profits, unlimited liability.

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