Forms of Business Ownership – Vocabulary Flashcards (Class 4)

Vocabulary flashcards covering key terms from forms of business ownership, entrepreneurship, PESTEL, and related concepts from the notes.

Sole Proprietorship

A business owned and usually managed by one person; easy to form.

Unlimited liability

Owner is personally responsible for all debts and damages of the business; business and owner are one.

Liability

Legal and financial responsibility for debts and obligations.

Partnership

Business owned by two or more people; can be general or limited.

General Partnership

All partners share profits and liabilities and are actively involved in management.

Limited Partner

An investor partner with limited or no management role and liability limited to investment.

Limited Partnership

A partnership with one or more general partners and one or more limited partners.

Corporation

A legal entity separate from its owners; limited liability; can raise capital.

Public corporation

Can issue shares to the public; shares may be listed on a stock exchange.

Private corporation

Shares not publicly traded; typically held by a small number of shareholders.

Stockholders/Shareholders

Owners of a corporation who hold its shares.

Cooperative (Co-op)

Incorporated business owned by members who share profits and control; often tax advantages.

Consumer co-operative

Co-op providing goods/services for members’ personal use.

Producer co-operative

Co-op where members are producers who market their goods through the coop.

Multistakeholder co-operative

Co-op with several categories of members sharing a common interest.

Worker co-operative

Co-op owned by worker-members who operate the enterprise.

Federation (co-op federation)

A co-operative of co-operatives; member co-ops form a larger network.

Franchise

A business model where a franchisor allows a franchisee to operate using its brand and systems for fees.

Franchisor

The party that grants rights to use the brand, system, and name.

Franchisee

An individual or entity that purchases the right to operate a franchise.

Franchise Agreement

Arrangement where the franchisor sells rights to use the brand and system in a territory.

Initial Franchise Fee

Upfront fee to start a franchise (example: around $25,000–$50,000).

Total Investment

Total cost to start a franchise, including equipment, build-out, and inventory (example: $246K–$2.16M).

Royalty Fees

Ongoing payments to franchisor (about 4.5%–6% of gross sales) plus advertising contributions.

Territory Rights

Non-exclusive rights to operate in a defined area; location approval required.

Mergers and Acquisitions (M&A)

Growth strategies where two firms merge or one buys another.

Going public

Process of offering a company’s shares to the public on a stock exchange.

Articles of Incorporation

Legal authorization from government to use the corporate format.

PESTEL

Framework analyzing Political, Economic, Sociocultural, Technological, Environmental, and Legal factors.

Political factors

Government actions like tax policies, trade rules, labor laws, and stability.

Economic factors

Inflation, interest rates, growth, unemployment, and consumer spending.

Sociocultural factors

Demographics, education, lifestyles, and cultural values affecting demand.

Technological factors

Innovation, automation, internet access, and new technologies.

Environmental factors

Climate change, sustainability, resource availability, and environmental laws.

Legal factors

Laws on employment, consumer protection, data privacy, and safety.