Chapter 6: Business Ownership and Operations

Introduction to BusinessUnit II: Business Ownership and

Environments

Alternative Ways to Do Business

FranchiseNonprofit OrganizationCooperative

Contractual agreement to sell a company’s products or services in a designated geographic area◦ Franchisee (single location) invests money and

pays an annual fee or share of profits◦ Franchisor (parent company) offers well-known

name, business plan, management training, advertising, and system of operations

◦ Franchise may be operated as sole proprietorship, partnership, or even corporation

Franchise

Franchise continued Advantages

◦ Easy to start◦ Proven methods and

products◦ Existing brand name

(parent company) Disadvantages

◦ Strict guidelines◦ Limited products and

services to offer

Fast Break ActivityReview the information on becoming a Subway franchisee. Then, answer the following questions.

1. What does Subway offer to its franchisees?

2. What does Subway look for in a franchisee? Why are these things important for the franchisor to know?

3. What does it cost to start and operate a Subway franchise?

:

Type of business that focuses on providing a service rather than making a profit

Has to register with government Might be run by board of directors No profit = no taxes Relies on

◦ Government grants◦ Donations from businesses and

individuals (tax breaks, no dividends)

Nonprofit Organization

TMA is a nonprofit organization. Answer the following questions to prepare for our discussion.1. Brainstorm a list of things that TMA has to pay

for during a regular school year. Try to make your list as complete as possible.

2. Based on your list, how much do you think it costs to run TMA for one school year?

3. How does TMA generate the money to operate? What are our sources of income/revenue?

Nonprofit Case Study: TMA

Organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services

Like a corporation in that◦ Exists as separate entity from individual businesses◦ Needs government charter to begin◦ Can sell stock and choose board of directors

Allows smaller companies to◦ Pool resources◦ Buy insurance, supplies, and advertising as a group◦ Share factory facilities and warehouse space◦ Pay less in taxes

Cooperative