1. Journal Entry If you could own any business…. What business would you own? Why? Would you own it alone? Would you own it with a partner? Would your partner be a friend? Family member? Why?

2. Forms of Business Ownership

3. Evaluation Criteria Tax consideration Tax consideration Liability exposure Liability exposure Start-up and future capital requirement Start-up and future capital requirement Control Control Managerial ability Managerial ability Business goals Business goals Management succession plans Management succession plans

4. Sole Proprietorship A business owned and managed by one individual; the business and the owner are one and the same in the eyes of the law

5. Sole Proprietorship Advantages  Simple to create  Least costly form  Profit incentive  Total decision-making  No special legal restrictions  Easy to discontinue

6. Sole Proprietorship Disadvantages  Unlimited personal liability  Limited skills and abilities  Feelings of isolation  Limited access to capital

7. Partnership An association of two or more people who co- own a business for the purpose of making a profit

8. Partnership Advantages  Easy to establish  Complementary skills  Division of profits  Larger pool of capital  Ability to attract limited partners  Little governmental regulation  Flexibility

9. Partnership Disadvantages  Unlimited liability of at least one  Difficulty in disposing of interest  Lack of continuity  Potential for personality and authority conflicts

10. Special Partnerships Limited partnership -composed of at least one general partner and at least one limited partner Limited partnership -composed of at least one general partner and at least one limited partner Limited liability partnership -a special type of limited partnership, in which all partners are limited partners Limited liability partnership -a special type of limited partnership, in which all partners are limited partners Master limited partnership -a partnership whose shares are traded on stock exchanges, just like corporations Master limited partnership -a partnership whose shares are traded on stock exchanges, just like corporations

11. Corporations A business that is owned by stockholders and that has legal rights and responsibilities as if it were a person.

12. Corporations Advantages  Limited liability of stockholders  Ability to attract capital  Ability to continue indefinitely  Transferable ownership

13. Corporations Disadvantages  Cost and time in incorporating  Double taxation  Legal requirements  Potential loss of control

14. Franchise Is the right or license to sell a company’s product or service at a designated location Involves: franchisor: a business which leases its trade name and operating system to another person franchisee: person or persons who pay fees to a company to operate a business under the franchisor’s trade name 14

15. Advantages Include: assistance from parent company  parent company shares experiences and proven techniques name recognition  McDonalds ®  Sherwin Williams ® shared advertising expenses 15

16. Disadvantages Include: high purchase fees percentage of sales or yearly fee paid to parent company must follow parent company business structure 16

17. Partner activity! Client 1: Elise MacMillan and her brother Evan co-founded The Chocolate Farm in Englewood, Colorado, in the late 1990s.The Chocolate Farm Client 2: Milton Hershey broke ground for his chocolate factory near Lancaster, PA in 1903. It was the beginning of what would become Hershey Foods Corporation.Hershey Foods Corporation Client 3: Forest Mars invited Bruce Murrie, an investment banker and son of the Hershey company president, to be his partner in M&M Ltd. The M&Ms we still eat today were first sold to the public in 1941. The letters in "M&M" stand for Mars & Murrie. Eventually, Murrie left the business but Forest Mars became the owner of Mars, Inc. Forest MarsMars, Inc. Client 4: Wally Amos launched the Famous Amos Cookie Company in a Hollywood, CA storefront on Sunset Boulevard in 1975.Famous Amos Cookie Company

18. Answer the following Questions: What has happened to the founder of the business? Is he or she still involved with the company? What other things has he or she done? Who owns the business? How has the business changed? Has the company been involved in any mergers or acquisitions? What products does the company sell? What made this company so successful?