Business Organizations Other Organizations Chapter 8 Section 4

Business Organizations In Chapter 7 – we learned about franchises issued by government authorities. These franchises give only one firm the right to sell its goods within a limited market, such as within a national park.

Business Organizations In business, a franchise signals exclusive rights. A Business franchise – a semi-independent business that pays fees to a parent company. In return the business is granted the exclusive right to sell a certain product or service in a given area.

Business Organizations Parent Companies are called franchisers. Franchisers develop the products and the business system. They work with the local franchise owners to help them produce and sell their products. Most people think of the fast-food industry.

Business Organizations Advantages of Franchises: 1. Management, training, and support Franchisers help inexperienced owners gain the experience they need to be successful. 2. Standardized quality Most parent companies require franchise owners to follow certain rules and processes to guarantee product quality.

Business Organizations Advantages of Franchises: 3. National Advertising Programs 4. Financial Assistance Some franchises provide assistance to help owners start up their business. 5. Centralized Buying Power Franchisers buy materials in bulk for all of their locations. The savings are passed onto the owners.

Business Organizations Disadvantages of Franchises High franchise fees and royalties Strict operating standards Owners must follow all of the rules laid out in the franchising agreement for employee dress code, procedures, and etc. Purchasing restrictions Owners must often buy their supplies from the parent company. Limited Product Line Can only offer approved products in their stores.

Business Organizations Cooperatives – a business organization owned and operated by a group of individuals for their mutual benefits.

Business Organizations Types: Consumer Cooperatives - retail outlet owned and operated by consumers. They buy in bulk amounts of goods and services on behalf of their members – able to offer it to their members at prices lower than those charged by regular businesses. Example – Sam’s Club {even though they are not a consumer cooperative}

Business Organizations

Business Organizations Types: Service Cooperative – a cooperative that provides service rather than a good. Example – Credit Union

Business Organizations Types: Producer Cooperative – agricultural marketing cooperative that helps members sell their products. Example: Farmer’s Co-ops

Business Organizations Nonprofit Organizations – institution that functions much like a business, but does not operate for the purpose of generating profit. Example: Red Cross, Museums, hospitals, churches, adoption agencies, YMCA, and etc. These groups are exempt from paying taxes. Some of them operate with partial government support.

Business Organizations Professional Organizations – nonprofit organization that works to improve the image, working conditions, and skill levels of people in those particular occupations. Example: American Bar Association, American Medical Association, American Veterinary Medical Association, National Education Association, and etc.

Business Organizations Professional Organizations keep their members up-to-date on industry trends, help them follow codes that have been set, and other things that come up throughout the year.

Business Organizations Business Association – nonprofit organization that promotes collective business interests for a city, state, or other geographical area. Example: Better Business Bureau {BBB} or Chamber of Commerce

Business Organizations Trade Associations – nonprofit organization that promotes the interests of a particular industry. Example: American Marketing Association – aims to improve marketers’ and marketing firms’ images.

Business Organizations Labor Union – an organization of workers formed to represent its members’ interests in various employment matters. Participate in collective bargaining for their members – work out the contracts that labor gets for their job/occupation. Example: American Auto Workers Union, Pipefitters Union, Carpenters Union, and etc.