Lesson+02

Lesson 2 - Forms of Business Ownership

• Partnership – a business owned by two or more persons who share the risks and rewards • Stock – shares of ownership in a corporation • Intermediary – business that acts as a go-between in moving goods from producers to consumers, such as wholesalers, retailers, and distributors • Sole proprietorship-a business owned by only one person • Corporation-a business treated by law as separate from its owners • Processors-businesses that change raw goods into more finished products • Manufacturers-businesses that make finished products out of raw processed goods • Unlimited liability-full legal and financial responsibility for a business • Limited liability-financial responsibility of business owners only for what they invested in a business • Franchise-a contractual agreement to use the name and sell the goods or services of an existing company • Nonprofit organization-a business whose main purpose is to provide a service rather than to make a profit • Cooperative-an organization of businesses owned and operated by the members, who pool their resources and share the benefits • Producer-a business that gathers raw products in their natural state • Wholesaler-a type of business that buys goods in large amounts and resells them to other businesses in smaller lots • Retailer-a business that sells goods or services directly to the public ||
 * **Important Terms for this Lesson:**

Two friends want to open a clothing consignment store. Individuals bring clothing to the consignment store and if the clothes sell, the consignment shop earns 60% and the customer receives 40% of the sale. What are the advantages of this type of business over other retail stores? Explain the advantages and disadvantages of operating this business as a sole proprietorship and a partnership. ||
 * **Guided Practice (Work with a partner and the teacher to 'solve' the following situation):**