The document compares five forms of business ownership: sole proprietorship, partnership, corporation, cooperative, and franchise. For each form: Sole proprietorships have unlimited liability but the owner makes all decisions and keeps all profits. Partnerships share responsibilities and profits but also have unlimited liability and potential conflicts. Corporations can accumulate large capital but face taxes and more regulations. Cooperatives are owned by members who receive discounts and refunds but decisions are made as a group. Franchises provide training and marketing but franchisees pay high fees and have limited products.

1. Role of Producers & Consumers in a Market Economy EPF2d. Compare Forms of Business Ownership

2. Essential question: What Are the characteristics of each form of business organization? 2

3. Forms of Ownership Facts: 5 Forms of Ownership: Sole proprietorship Partnership Corporation Cooperative Franchise Most businesses in the US are sole proprietorships Corporations generate the most income 3

4. Essential question: What are the costs and benefits of each form of business? 4

5. SOLE PROPRIETORSHIP Benefits The owner makes all the decisions The owner keeps all the profits Costs The owner generally has limited financial resources The owner faces unlimited liability, which means if the company fails, the owner can lose personal assets along with business assets. 5

6. Partnership Benefits Owners make decisions Owners keep profits Owners share responsibilities – each has a unique set of skills and expertise Costs Owners face unlimited liability Owners have limited financial resources Potential conflict with partners 6

7. Corporation Benefits Able to accumulate sufficient financial capital to make large-scale investments and achieve economies of scale (i.e. bringing down cost of production by producing in volume) Have limited liability, meaning shareholder risk is limited to their share of ownership in the corporation The corporation transcends the lives of those persons who created it. Costs Corporations face tax implications (e.g. double taxation – profits are taxes at the corporate level and again when distributed to shareholders as dividends) Corporations are more expensive to establish Corporations are governed by more regulations. 7

8. COOPERATIVE Benefits Are members owned and operate for members benefit (e.g. credit unions) Members enjoy discounted services and may receive refunds at the end of the year Face no personal liability Have a vote in how the business is run Have interests similar to other members Costs Decisions made by the group may not suit all members The decision make process may be more complex and slower than other organizations 8

9. FRANCHISE Benefits Training and marketing is provided by the franchisor The franchisee gains exclusive rights to sell in an area Franchisee benefits from product development Costs The franchisee pays high franchise fees There is a limited product line Operates under strict guidelines and standards 9