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sole proprietorship

A form of business ownership with a single owner who usually actively manages the company


A voluntary agreement under which two or more people act as co-owners of a business for profit.

general partnership

A voluntary agreement under which two or more people act as co-owners of a business and have unlimited liability for any claims against the firm


A form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners

articles of incorporations

The document filed with a state government to establish the existence of a new corporation.

limited liability

When owners are not personally liable for claims against their firm. Limited liability owners may lose their investment in the company, but their personal assets are protected.

limited liability company

A form of business ownership that offers both limited liability to its owners and flexible tax treatment

limited partnership

A partnership that includes at least one general partner who actively manages the company and accepts unlimited liability and one limited partner who gives up the right to actively manage the company in exchange for limited liability.

limited liability partnership

A form of partnership in which all partners have the right to participate in management and have limited liability for company debts.

C corporation

The most common type of business corporation, where ownership offers limited liability to all of its owners, also called stockholders.

corporate bylaws

The basic rules governing how a corporation is organized and how it conducts its business

institutional investor

An organization that pools contributions from investors, clients, or depositors and uses these funds to buy stocks and other securities

board of directors

The individuals who are elected by stock- holders of a corporation to represent their interests


An owner of a corporation.

S corporation

A form of corporation that avoids double taxation by having its income taxed as if it were a partnership.

statutory close corporation

A corporation with a limited number of owners that operates under simpler, less formal rules than a C corporation.

nonprofit corporation

A corporation that does not seek to earn a profit and differs in several fundamental respects from general corporations.


A corporate restructuring in which one firm buys another.


A corporate restructuring that occurs when two formerly independent business entities combine to form a new organization.


The transfer of total or partial ownership of some of a firm's assets to investors or to another company

horizontal merger

A combination of two firms that are in the same industry

vertical merger

A combination of firms at different stages in the production of a good or service

conglomerate merger

A combination of two firms that are in unrelated industries.


a licensing agreement wherebu a franchisor allows franchisees to use its name, trademark, products, business methods and other property in exchange for monetary payments and other consideration


the business entity in a franchise relationship that allows others to operate their business using resources it supplies in exchange for money and other considerations


The party in a franchise relationship that pays for the right to use resources supplied by the franchisor

business format franchise

A broad franchise agreement in which the franchisee pays for the right to use the name, trademark, and business and production methods of the franchisor.

franchise agreement

The contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties.

franchise disclosure document (FDD)

A detailed description of all aspects of a franchise that the franchisor must provide to the franchisee at least 14 calendar days before the franchise agreement is signed.


type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

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