Business Organizations Flashcards

Vocabulary flashcards for business organizations: corporations and franchises.

Corporation

An organization owned by many people, but treated by law as if it were a person.

Corporation

A form of business organization that is authorized to act as a single entity regardless of the number of owners.

Shareholders

People who buy stock in a corporation; they are the owners of the corporation.

Limited Liability

Stockholders are not personally responsible for the actions of the corporation; their liability is limited to their investment.

Common Stock

Stock that gives the stockholder the right to vote on decisions in the corporation and a percentage of future profits.

Preferred Stock

Stock that doesn't give voting rights, but it guarantees a certain amount of dividend each year and has first claim on assets if the corporation goes out of business.

Board of Directors

A group elected by stockholders to supervise and control the corporation.

Franchise

A contract in which the franchisor sells to another business the right to use its name and sell its product.

Franchisee

The person or business buying the franchise.