Beruflich Dokumente
Kultur Dokumente
Simple to create
Least costly form to begin
Profit incentive
Total decision making authority
No special legal restrictions
Easy to discontinue
Disadvantages of the Sole Proprietorship
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1-9
Partnership
Easy to establish
Complementary skills of partners
Division of profits
Larger pool of capital
Ability to attract limited partners
Minimal government regulation
Flexibility
Taxation
Types of Partners
General partners
Take an active role in managing a business.
Have unlimited liability for the partnership’s debts.
Every partnership must have at least one general partner.
Limited partners
Cannot participate in the day-to-day management of a company.
Have limited liability for the partnership’s debts.
Types of Limited Partners
Partnership
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Claims of Partnership’s Creditors
General Partnership’s
Partner’s Assets
Personal
Assets
Disadvantages of the Partnership
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Limited Partnership
File all reports and pay all necessary fees required by the state in a timely manner.
Keep minutes of every meeting (formal and informal) of the officers and directors.
Make it clear that the business is a corporation – officers should sign all documents in
the corporation’s name.
S- corporation removed
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LLC’s Assets
Member’s Member’s
Personal Assets Personal Assets
The Professional Corporation
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The Joint Venture
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Conclusion
The “right” choice of the form of ownership is unique to
every entrepreneur and their business.
Each form has advantages and disadvantages.
The entrepreneur must be thoughtful and strategic about
this important decision.
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Buying a Business
Key Questions
to Consider Before Buying a Business
Is the right type of business for sale in the market in which you want to
operate?
What experience do you have in this particular business and the industry in
which it operates? How critical is experience in the business to your ultimate
success?
What is the company’s potential for success?
What changes will you have to make – and how extensive will they have to be
– to realize the business’s full potential?
Key Questions
to Consider Before Buying a Business
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Ch. 6: Franchising and the Entrepreneur
1 - 31
Advantages of Buying a Business
(continued)
1. Why does the owner want to sell ... what is the real reason?
2. What is the physical condition of the business?
Accounts receivable
Lease arrangements
Business records
Intangible assets
Location and appearance
3. What is the potential for the company's products or services?
Product line status
Potential for company’s products or services
Customer characteristics and composition
Competitor characteristics and composition
4. What legal aspects must I consider?
The Legal Aspects of Buying a Business
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The Acquisition Process
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FIGURE 7.2
Ch. 7: Buying an Existing Business
Sources: Adapted from Buying and Selling: A Company Handbook, Price Waterhouse,( New York: 1993) pp.38-42;Charles F. Claeys, “The Intent to Buy,” Small Business Reports, May 1994, pp.44-47.
Negotiating the Deal
Buyers seek to:
Get the business at the lowest cost.
Negotiate favorable payment terms.
Get assurances that they are buying the business they are
getting.
Avoid putting the seller in a position to open a competing
business.
Minimize the amount of cash paid up front.
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Negotiating the Deal
7 - 44
The Five Ps of Negotiating
In addition to the text
7 - 45
Patience – up and blow
Don’t be in such the deal.
a hurry to close the deal that
you end up giving up much of what
you hoped to get. Impatience is
a major weakness in
a negotiation.
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CHAPTER 7
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The Franchising Boom
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Number of Franchised Outlets in
the United States
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The Franchising Relationship
Element The Franchiser The Franchisee
Site Selection Oversees and approves; may choose site Chooses site with franchiser’s approval
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Products and Services Determines product or service line Modifies only with franchiser’s approval
Purchasing Establishes quality standards and Must meet quality standards and purchase
suppliers only from approved suppliers
Advertising Develops and coordinates national ad Pays for national ad campaign; complies
campaign; may require minimum level of with local advertising requirements; gets
spending on local advertising franchisor approval on local ads
Quality Control Sets quality standards and enforces them Maintains quality standards; trains
with inspections; trains franchisees employees to implement quality systems
FIGURE 6.1
Source: Adapted from Economic Impact of Franchised Businesses: A Study for the International Franchise
Association, National Economic Consulting Practice of PriceWaterhouseCoopers, (IFA Educational Foundation, New
York: 2004), pp. 3,5.
Types of Franchising
Trade-name:
A franchisee purchases the right to use the franchisor’s
trade name without distributing particular products
exclusively under the franchisor’s name.
Product distribution:
A franchisor licenses a franchisee to sell its products under
the franchisor’s brand name and trademark through a
selective, limited distribution network.
Pure:
A franchisor sells a franchisee a complete business format
and system.
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Franchising Basics
6 - 55
Benefits of Franchising
A business system
Management training and support
Start-up
Ongoing
Brand name appeal
“Cloning”
Standardized quality of goods and services
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Benefits of Franchising
6 - 57
Benefits of Franchising
6 - 58
Drawbacks of Franchising
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Drawbacks of Franchising
(continued)
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Ten Myths of Franchising
1. Franchising is the safest way to go into business because franchises
never fail.
2. I’ll be able to open my franchise for less money than the franchiser
estimates.
3. The bigger the franchise organization, the more successful I’ll be.
4. I’ll use 80 percent of the franchiser’s business system, but I’ll improve
upon by substituting my experience and know-how.
5. All franchises are the same.
6. I don’t have to be a hands-on manager, I can be an absentee owner and
still be very successful.
7. Anyone can be a satisfied, successful franchise owner.
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Ten Myths of Franchising (continued)
6 - 62
Franchising and the Law
6 - 63
Detecting Dishonest Franchisers
In addition to the text
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Detecting Dishonest Franchisers (continued)
In addition to the text
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The Right Way to Buy a Franchise
Evaluate yourself - What do you like and dislike?
Research your market.
Consider your franchise options.
Get a copy of the Franchisor’s FDD – and read it!
Talk to existing franchisees.
Ask the franchiser some tough questions.
Make your choice.
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Factors That Make a Franchise Appealing
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Trends Shaping Franchising
International opportunities
Many franchises are focusing on international markets as a
source of growth.
Yum! earns 75% of its revenues from international franchises.
McDonald’s earns 70% of its sales internationally.
(continued)
Refranchising
Franchisors sell their company-owned outlets to franchisees.
Multi-unit franchising
IFA: 20% of franchise owners are multiple-unit owners.
Typical multiple-unit franchises own five outlets.
(continued)
Area development and master franchising
Area development: the franchisee earns the exclusive right to
open multiple units in a specific territory in a specific time.
Master franchise: franchisee has the right to create a semi-
independent organization in a particular territory to recruit, sell,
and support other franchisees.
Co-branding
Aka piggyback or combination franchising:
Two or more franchises team up to sell complementary products or
services under one roof.
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