Exam 6: Forms of Business Ownership

The sole proprietorship form of ownership tends to be attractive to people who want to invest in a company without taking an active role in management.

Ted and Mark have been partners in a dry cleaning business for the past three years.They would like their brother Todd to join them.Unfortunately,partnership law states that only two partners can participate in a partnership.

A disadvantage of corporations is that they generally require extensive paperwork.

People who form co-operatives:

Yolanda owns a roofing business.She enjoys being her own boss,but her satisfaction comes at a price.Her days are filled with organizing the activities of her employees and soliciting new customers.She often misses activities with friends and family because of the obligations of running her own business.She also knows that she has unlimited personal liability for any of her firm's debts.It appears that Yolanda's business is organized as a:

Co-operatives can be found in many sectors of the economy.

Franchising in global markets has demonstrated that convenience and predictable levels of service are important worldwide.

In a co-operative,members/customers:

Elroy is the sole proprietor of a gift shop in a small shopping centre.Because he is a sole proprietor,any profit Elroy's business earns is:

A corporation is a federally or provincially chartered legal entity,with authority to act and have liability separate from its owners.

Laurel has always worked for others,but has become tired of following orders.She wants to find an inexpensive way to start her own business so that she can have the freedom to run her business exactly as she sees fit.Laurel could achieve her goals by becoming a franchisee.

A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

A legal entity with authority to act separately from its owners is known as a ___________.

A(n)__________is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.

What is the difference between a general partner and a limited partner? Give an example of a situation in which a person would want to be a limited partner.

When entering into a new partnership,the partners should:

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

All of the partners in a general partnership have limited liability for the debts of their firm.

Maria is already a successful franchisee with Nite Lite,a chain of "no frills" motels that provide clean rooms and good service at affordable rates.The motel she currently operates is located in the Maritime provinces,but she is considering an opportunity to open another Nite Lite motel in the United States.Although her costs of operating in a new country may be higher,she will offer the benefits of convenience and a predictable level of service.

Juan wants to start his own business.He would be most likely to favour organizing his new company as a sole proprietorship if he: