Introduction to Business Unit II: Business Ownership and Environments

Franchise Nonprofit Organization Cooperative

 Contractual agreement to sell a company’s products or services in a designated geographic area ◦ Franchisee (single location) invests money and pays an annual fee or share of profits ◦ Franchisor (parent company) offers well-known name, business plan, management training, advertising, and system of operations ◦ Franchise may be operated as sole proprietorship, partnership, or even corporation

 Advantages ◦ Easy to start ◦ Proven methods and products ◦ Existing brand name (parent company)  Disadvantages ◦ Strict guidelines ◦ Limited products and services to offer Fast Break Activity Review the information on becoming a Subway franchisee. Then, answer the following questions. 1. What does Subway offer to its franchisees? 2. What does Subway look for in a franchisee? Why are these things important for the franchisor to know? 3. What does it cost to start and operate a Subway franchise? :

 Type of business that focuses on providing a service rather than making a profit  Has to register with government  Might be run by board of directors  No profit = no taxes  Relies on ◦ Government grants ◦ Donations from businesses and individuals (tax breaks, no dividends)

 TMA is a nonprofit organization. Answer the following questions to prepare for our discussion. 1.Brainstorm a list of things that TMA has to pay for during a regular school year. Try to make your list as complete as possible. 2.Based on your list, how much do you think it costs to run TMA for one school year? 3.How does TMA generate the money to operate? What are our sources of income/revenue?

 Organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services  Like a corporation in that ◦ Exists as separate entity from individual businesses ◦ Needs government charter to begin ◦ Can sell stock and choose board of directors  Allows smaller companies to ◦ Pool resources ◦ Buy insurance, supplies, and advertising as a group ◦ Share factory facilities and warehouse space ◦ Pay less in taxes