Understanding Business Structures

What are the main types of business ownership?

• Franchise, cooperative, joint venture

• Limited partnership, private equity, trust

• Sole proprietorship, partnership, corporation, limited liability company (LLC)

• Sole trader, public company, nonprofit

What is one key advantage of a sole proprietorship?

• Shared decision-making with partners.

• Limited access to funding.

• Complete control over business decisions.

• High personal liability for debts.

List two disadvantages of partnerships.

• Simplified tax structure compared to corporations.

• Easy transfer of ownership.

• 1. Shared liability for debts and obligations. 2. Complicated decision-making process.

• Unlimited personal liability for business losses.

What is a limited liability company (LLC)?

• An LLC is a government agency that regulates businesses.

• A limited liability company (LLC) is a type of insurance policy for businesses.

• A limited liability company (LLC) is a partnership that requires all partners to share profits equally.

• A limited liability company (LLC) is a business entity that protects its owners from personal liability while providing tax advantages.

How does franchising work in business?

• Franchising works by allowing a franchisee to operate a business under the franchisor's brand in exchange for fees and adherence to established systems.

• Franchising is a method where businesses sell their products directly to consumers without intermediaries.

• Franchising requires franchisees to create their own brand and marketing strategies.

• Franchising allows businesses to operate independently without any brand affiliation.

What are the benefits of a cooperative business model?

• Limited liability for members

• Focus on maximizing shareholder profits

• Centralized decision-making

• Benefits of a cooperative business model include shared profits, democratic control, community focus, and increased member engagement.

Define a holding company.

• A holding company is a government entity that regulates financial markets.

• A holding company is a business entity that owns other companies' outstanding shares.

• A holding company is a type of investment fund that only invests in real estate.

• A holding company is a business that provides services to other companies without owning them.

What is the primary disadvantage of a sole proprietorship?

• Complex tax structure

• Difficulty in decision-making

• Limited access to capital

• Unlimited personal liability

How can partnerships benefit from shared resources?

• Partnerships benefit from shared resources by reducing costs and increasing efficiency.

• Shared resources lead to more competition among partners.

• Partnerships rely solely on individual resources for success.

• Partnerships increase costs and decrease efficiency.

What is the role of a franchisee in a franchising agreement?

• The franchisee is responsible for creating the brand's marketing strategy.

• The role of a franchisee is to operate a business using the franchisor's brand and system.

• The franchisee must develop new products independently.

• The franchisee acts as a consultant for the franchisor.