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32 Cards in this Set
- Front
- Back
Sole/Individual Proprietorship
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Form of business ownership in which one individual owns the business
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Advantages of Sole Proprietorship
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1. Not require to expend resources on organizational fees
2. Controls all the decisions and receives all profits 3. Net earning are not subject to corporate income taxes but are taxed only as personal income |
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Disadvantages of Sole Proprietorship
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1.Subject to unlimited personal liability of rthe debts of the business and cannot limit this risk
2. Investment capital in the business is limited by the resoucres of the sole proprietor 3. Authority to make contracts terminates on the death of the owner |
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Partnership
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Involves the pooling of capital resources and the business or professional talents of two or more individuals whose goal is making a profit
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Limited Liability Partnership
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Partnership in which at least one partner has a liability limited to the loss of the capital contribution made to the partnership
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Limited Liability Company
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Businesses that allow tax treatment as a partnership with limited liability for the owners
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Advantages of Partnership
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Allows individuals to pool resources and then initiate and conduct their business without the requirement of a formal organizational structure
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Disadvantages of Partnership
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Unlimited personal liability of each partner and the uncertain duration of the business because the partnership is dissolved by the death of one partner
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Corporations
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Artificial being created by government grant, which for many purposes is treated as a natural person
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State statues require a corporate structure consisting of what?
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Shareholders, directors, and officers
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Advantages of Corporations
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Shareholder's risk of loss from the business is limited to the amount of capital she invested in the business or paid for shares
Free transferability Capable of owning property, contracting, suing, and being sued in its own name |
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Disadvantages of Corporations
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Required to pay corporate income taxes and shareholders are required to pay personal income taxes on the amount received when they receive a distribution of profits from the corporation=double taxation
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Joint Ventures
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Relationship in which two or more persons or firms combine their labor or property for a single undertaking and share profits and losses equally unless otherwise agreed
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Unincorporated Association
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Combination of two or more persons for the furtherance of a common nonprofit purpose
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Authority of an unincorporated association over its members is governed by what?
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Ordinary contract law
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Cooperative
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Group of two or more persons or enterprises that acts through a common agent with respect to a common objective (buying or selling)
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Franchising
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Method of doing business
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Franchising relies on what to set forth the rights and obligations of the parties?
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Contract law
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Franchise
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1. "an arrangement in which the owner of a trademark, trade name, or copyright licenses others, under specified conditions or limitations, to use the trademark, trade name, or copyright in purveying goods or services"
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Franchisor
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Party granting the franchise
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Franchisee
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Person to whom the franchise is granted
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Types of Franchises
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1. Manufacturing/Processing Franchise
2. Service Franchise 3. Distribution Franchise |
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Manufacturing Franchise
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Franchisor grants the franchisee authority to manufacture and sell products under the trademark of the franchisor
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Service Franchise
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Franchisee renders a service to customers under the terms or a franchise agreement
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Distribution Franchise
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Franchisor's products are sold to a franchisee who resells to customers in a geographical area
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Arms-Length Relationship
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Relationship between two independent contractors such as franchisor and franchisee
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Franchise Agreement
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Contract existing between franchisor and franchisee
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Trademark
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Mark that identifies a product
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Trade Name
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Name under which a business carried on and, if fictitious, must be registered
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Trade Dress
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Product's total image including its overall packaging look
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Trade Secret
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Formula, device, or compilation of information that is used in one's business and is of such a nature that it provides an advantage over competitors who do not have the information
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Franchise Disclosure Rule
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Requires franchisors to give prospective franchisees a full disclosure statement 10 days before a franchisee signs a contract or pays any money for a franchise
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