1. Section 2: Partnerships and franchises
Chapter 8: Business Organizations
Section 2: Partnerships and franchises

2. Partnerships A business organization that is
Owned by two or more people
Responsibilities are split
Profits are split

3. Types of Partnerships General Partnership
Most common type of partnership
Characteristics
Share responsibilities equally
Share profits equally
Share liability equally
UNLIMITED,
PERSONAL,
LIABILITY!

4. Types of partnerships Limited Partnership Characteristics
Only one partner runs the business
Only one partner shoulders
UNLIMITED,
PERSONAL,
LIABILITY!

5. Types of partnerships Limited partnerships Characteristics
Second* partner’s role
Contribute money
LIMITED liability – can only lose investment
Collect share of profits
Second partner’s limitations
No say in how to run business
“Silent Partner”

6. Types of Partnerships Limited Partnership Partners are not equal
One must be the “general” partner
Controls the company
UNLIMITED PERSONAL LIABILITY
Splits the profits
Other partner(s)
Put up money
Shares profits
Has NO SAY / NO CONTROL

7. Types of Partnerships Limited Liability Partnerships
Similar to General Partnership
Partners are pretty much equal
There is LIMITED liability
Only company assets are at risk
Only partner’s assets are at risk if he or she makes the mistake
Only certain types of companies can be “LLPs”

8. Partnerships Advantages Easy and inexpensive to establish
Little government regulation
More than one person contributes money and skills
Can offer more fringe benefits
Shared decision making

9. Partnerships Disadvantages Potential conflict with partner(s)
Unlimited liability (except LLPs)
If your partner messes up and the company suffers, you suffer too!
Lack of permanence

10. Partnerships YOUR TURN:
1. Which one of the three forms of partnerships do you think is best?
2. Why is it better than the
other two forms?
(Give at least TWO good reasons.)

11. Franchises SEMI-independent business Pays fees to parent company
Gets rights to open a store
in a certain area

12. Franchises Advantages Training and support from the parent company
Standardized quality requirements attract customers
Advertising benefits
Financial aid from parent company
Bulk buying benefits

13. Franchises Disadvantages Payments to mother company
Fees to start the business
A portion of the profits (royalties)
Mother company sets strict standards
You MUST purchase from mother company or from approved markets
Limited to selling only their products

14. Franchises
YOUR TURN:
You investigate the idea of opening your own franchise. (Sears Hardware Store?)
1.Which advantage(s) is/are most important to consider? Why?
2.Which disadvantage(s) is/are most important to consider? Why?
3.Do you do it?