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Ent 1 Obj 105
Types of Business
| Term | Definition |
|---|---|
| Acquisition | The process of taking possession of something (e.g., acquiring another business by purchasing it) |
| Annual Report | A document outlining the financial status of a business |
| Assest(s) | Anything of value that a business or individual owns |
| Better Business Bureau | A consumer organization that monitors complaints against businesses |
| Board of Directors | A group of people chosen to govern the activities of a corporation |
| Business-format franchise | A franchise arrangement in which the franchisee must operate under the trade name of the parent company that provides continuous assistance in setting up and operating the business |
| “C” corporation | A form of business ownership that is considered a separate legal entity from its owners; can be owned by unlimited stockholders and is susceptible to dual taxation; also known as a public corporation |
| Capital | Assets of a business |
| Commission | A percentage of the total sale amount paid to the individual or business that makes the sale |
| Consolidation | A form of business growth in which a corporation acquires many smaller companies |
| Corporation | A form of business ownership that is owned by stockholders who have purchased units or shares of the company; an "artificial being, invisible, intangible, and existing only in contemplation of law” (U.S. Supreme Court) |
| Dealership | See product trade-name franchise |
| Dividend | A sum of money paid to an investor or stockholder as earnings on an investment |
| Dual/Double Taxation | The levying of two taxes on the same income (e.g., tax on a corporation’s income as well as dividends) |
| Exclusive distributorship | See product trade-name franchise |
| Expansion | A form of business growth in which a company extends its operations or facilities using new capital or reinvested funds |
| Franchise | A contractual agreement between a parent company and a franchisee to distribute goods or services |
| Franchisee | One who buys the right to sell the goods or services of the parent company (franchisor) |
| Franchising | A method of distributing recognized goods and services through a legal agreement between two parties |
| Franchisor | A parent company and owner of the name and/or system that is being distributed through a contractual franchising arrangement |
| General Partnership | A type of business agreement in which all partners are liable for a business’s losses; also known as ordinary partnership |
| Hybrid Structure | A form of business ownership that combines elements of corporations and either sole proprietorships or partnerships |
| Joint Venture | Arrangement that involves businesses entering into a relationship by combining complementary resources, such as skills, capital, or distribution channels, for the benefit of all parties relationship is usually short-term or for single project/transaction |
| Licensee | The buyer of copyrighted, patented, or trademarked material |
| Licensing | A business structure that requires the authorization or permission from an owner to another entity to use trademarked, copyrighted, or patented material for a specific activity, during a specific time period, for the profit of both parties |
| Licensor | The owner of copyrighted, patented, or trademarked material |
| Limited Liability | Restricted chance of loss; a condition in which business owners risk only the amount of their investment |
| Limited Liability Company (LLC) | A form of business ownership in which members of a corporation experience limited liability; there is limited taxation on company income and limited life for the business entity |
| Limited Liability Partnership (LLP) | A form of business ownership that is generally used by business professionals for the purpose of protecting innocent partners from the malpractice of the other partners |
| Limited Partnership | A type of partnership agreement in which at least one partner has limited liability and a general partner has unlimited liability; the liability of the limited partner(s) is limited to the amount of their investment |
| Master Licensee | A person or firm who helps franchisors find franchisees in a particular region or territory |
| Merger | Two individual businesses that combine to form one organization |
| Multi-level Marketing | A business structure that pays commissions on sales earned to people at two or more levels; the sales representatives usually work independently of the company; the representatives not only sell products but try to get others to sell them |
| Nonprofit Organization | A legal business structure that primarily operates for the purpose of serving others, not to make a profit; income is used to cover operational expenses; can be exempt from paying some or all taxes |
| Operating Agreement | A written document signed by members of a limited liability partnership (LLP) or limited liability company (LLC) that specifies the terms of their business arrangement |
| Partnership | A form of business ownership in which the business is owned by two or more persons |
| Piggyback Franchise | A form of ownership in which retail franchise operates within the facilities of another store, often referred to as the host |
| Private Corporation | A type of corporation owned by a few people that does not offer its shares for sale to the general public; also known as closely held, or close, corporation |
| Private Enterprise System | An economic system in which individuals and groups, rather than the government, own or control the means of production; also known as free market economy, private profit system, market system, capitalistic system, or free enterprise system |
| Product Trade-Name Franchise | A franchise arrangement based on an independent sales relationship between a franchisor and franchisee to stock and sell a specific line of goods; also known as dealership or exclusive distributorship |
| Public Corporation | A type of corporation that usually sells millions of shares of stock to many stockholders; must make its financial information available to the general public; also known as a “C” corporation |
| Pyramid Scheme | An illegal form of multi-level marketing in which emphasis is placed on collecting initial fees from as many people as possible |
| Royalty | Fees paid to a parent company that are often based on a percentage of the franchise’s profits; a percentage of actual sales that a licensee pays to a licensor; usually anywhere from 5 to 15% |
| Shareholders | Owners of stock; also known as stockholders |
| Sole proprietorship | A business owned by one person who receives all the profits from the business and takes all the risks |
| Stockholders | Owners of stock; also known as shareholders |
| Subchapter “S” Corporation | A type of corporation that is limited to 100 or fewer shareholders, has limited shareholder liability, and requires little financial reporting; taxed as a partnership; also known as an “S” corporation |
| Unlimited Liability | Requirement that business owners be responsible for paying business debt; personal assets can be used to pay the debt |
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