Section 4 VOCAB- Forms of Business Ownership

franchisor

In a franchising arrangement, the company that supplies the product or service concept to the franchisee.

general partners

Partners who have unlimited liability for all of the firm's business obligations and who control its operations.

general partnership

A partnership in which all partners share in the management and profits. Each partner can act on behalf of the firm and has unlimited liability for all its business obligations.

horizontal merger

A merger of companies at the same stage in the same industry; done to reduce costs, expand product offerings, or reduce competition.

joint venture

Two or more companies that form an alliance to pursue a specific project, usually for a specified time period.

leveraged buyout (LBO)

A corporate takeover financed by large amounts of borrowed money; can be started by outside investors or the corporation's management.

limited liability company (LLC)

A hybrid organization that offers the same liability protection as a corporation but may be taxed as either a partnership or a corporation.

limited partners

Partners whose liability for the firm's business obligations is limited to the amount of their investment. They help to finance the business but do not participate in the firm's operations.

limited partnership

A partnership with one or more general partners, who have unlimited liability, and one or more limited partners, whose liability is limited to the amount of their investment in the company.

merger

The combination of two or more firms to form one new company.

partnership

An association of two or more individuals who agree to operate a business together for profit.

S corporation

A hybrid entity that is organized like a corporation, with stockholders, directors, and officers, but taxed like a partnership, with income and losses flowing through to the stockholders and taxed as their personal income.

seller cooperative

Individual producers who join together to compete more effectively with large producers.

sole proprietorship

A business that is established, owned, operated, and often financed by one person.

stockholders (or shareholders)

The owners of a corporation who hold shares of stock that carry certain rights.

vertical merger

A merger of companies at different stages in the same industry; done to gain control over supplies of resources or to gain access to different markets.