Man 1030-Week 3
Professor Nathan Riggs
Please define each of these four forms of business ownership and then respond to the following questions: (1) Sole Proprietorship- A business that is owned and usually managed by one person; it is the most common form. (2) Partnership- A legal form of business with two or more owners. (3) Corporation- Is a legal entity with authority to have liability separate from its owners. (4) Franchisors-Owns the overall rights and trademarks of the company and allows its franchises to use these rights and trademarks to do business. The entity or person owning the rights or license of the business.
Do you think that Sonic would have grown as large as it did today if had remained a Sole Proprietorship? Why or Why not ?
In my opinion , I would say no due to the fact that it would have caused the disadvantage of limit growth, limited reasons and unlimited liability. In terms of partnership it would bring about conflicts with a partner, division of profits, difficulty termination and unlimited liability. As a corporation , they would have encountered limited liability, the ability to raise more money investments, ease of ownership change and the ease of separating of owner from management.
What were the advantages and disadvantages to Sonic each form of business Ownership?
The advantages are they have the ability to have as many Sonic Restaurants all over the world, personal ownership, lower failure rate and management marking assistance compared to someone who begin a business from scratch. The disadvantages are that they have large start-up costs, shared profits, management regulations and coattail effect. Another advantage would be having a unified voice to protect their investments. Sonic has survived and continues to be successful, not only by maintaining a strong fast food presence throughout the years as drive –in. While other chains have gone under one by one.
References: Learning activities 1 and 2
Learning video Sonic is Booming
Understanding Business McGraw & Hill
Chapter 1 pgs. 8-11
Chapter 5 How to form a business-pgs. 114-145
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