Business Law Vocabulary List (001) Flashcard

Acquisition
The process of taking possession of something, e.g., acquiring another business by purchasing it
Annual report
A document outlining the financial status of a business
Asset(s)
Anything of value that a business or individual owns
Better Business Bureau
A consumer organization that monitors complaints against businesses
Business-format franchise
A franchise arrangement in which the franchisee must operate under the trade name of the parent company that provides continuous assistance in setting up and operating the business
Capital
Assets of a business
Commission
A percentage of the total sale amount paid to the individual or business that makes the sale
Consolidation
A form of business growth in which a corporation acquires many smaller companies
Corporation
A form of business ownership that is owned by stockholders who have purchased units or shares of the company; an “artificial being, invisible, intangible, and existing only in contemplation of the law”
Dealership
See product trade-name franchise
Dividend
A sum of money paid to an investor or stockholder as earnings on an investment
Dual/Double taxation
See product trade-name franchise
Exclusive distributorship
See product trade-name franchise
Expansion
A form of business growth in which a company extends its operations or facilities using new capital or reinvested funds
Franchise
A contractual agreement between a parent company and a franchisee to distribute goods or services
Franchisee
One who buys the right to sell the goods or services of the parent company (franchisor)
Franchising
A method of distributing recognized goods and services through a legal agreement between two parties
Franchisor
A parent company and owner of the name and/or system that is being distributed through a licensing arrangement
General partnership
A type of partnership agreement in which all partners are liable for a business’s losses; also known as ordinary partnership
Hybrid structure
A form of business ownership that combines elements of corporations and either sole proprietorships or partnerships
Joint venture
An arrangement that involves two or more businesses entering into a relationship by combining complementary resources such as technology, skills, capital, or distribution channels, for the benefit of all parties; the relationship is usually short-term or for a single project/transaction
Licensee
The buyer of copyrighted, patented, or trademarked material
Licensing
A business structure that requires the authorization or permission from an owner to another entity to use trademarked, copyrighted (e.g., logo, name), or patented material for a specific activity, during a specific time period, for the profit of both parties
Licensor
The owner of copyrighted, patented, or trademarked material
Limited liability
Restricted chance of loss; a condition in which business owners risk only the amount of their investment
Limited liability company (LLC)
A form of business ownership in which members of a corporation experience limited liability; there is limited taxation on company income, and limited life for the business entity
Limited liability partnership (LLP)
A form of business ownership that is generally used by business professionals for the purpose of protecting innocent partners from the malpractice of the other partners
Limited partnership
A type of partnership agreement in which a partner has limited liability; the liability is limited to the amount of the investment
Master licensee
A person or firm who helps franchisors find franchisees in a particular region or territory
Merger
Two individual businesses that combine to form one organization
Multi-level marketing
A business structure that pays commission on sales earned by people at two or more levels; the sales representatives usually work independently of the company; the representatives not only sell products but try to get others to sell them
Nonprofit corporation
A legal business structure that primarily operates for the purpose to serve others—not to make a profit; income is used to cover operational expenses; can be exempt from paying some or all taxes
Operating agreement
A written document signed by members of a limited liability partnership or limited liability company that specifies the terms of the business arrangement
Partnership
A form of business ownership in which the business is owned by two or more persons
Piggyback franchise
A form of ownership in which a retail franchise operates within the facilities of another store; often referred to as the host
Private corporation
A type of corporation owned by a few people that does not offer its shares for sale to the general public; also known as closely held, or close, corporation
Private enterprise system
An economic system in which individuals and groups, rather than the government, own or control the means of production—the human and natural resources and capital goods used to produce goods and services. Also known as free market economy, private profit system, market system, capitalistic system, or free enterprise system
Product trade-name franchise
A franchise arrangement based on an independent sales relationship between a franchisor and franchisee to stock and sell a specific line of goods; also known as dealership or exclusive distributorship
Public corporation
A type of corporation that usually sells millions of shares of stock to many stockholders; must make its financial information available to the general public; also known as an open corporation
Pyramid scheme
An illegal form of multi-level marketing in which emphasis is placed on collecting initial fees from as many people as possible
Royalty
Fees paid to a parent company that are often based on a percentage of the franchise’s profits; a percentage of actual sales that a licensee pays to a licensor; usually anywhere from 5 to 15 percent
Sole proprietorship
A business owned by one person who receives all the profits from the business and takes all the risks
Stockholders
Owners of stock; also known as shareholders
Subchapter “S” corporation
A type of corporation that is limited to 100 or fewer shareholders, has limited shareholder liability, and requires little financial reporting; taxed as a partnership; also known as an “S” corporation
Unlimited liability
Requirement that business owners be responsible for paying business debt; personal assets can be used to pay the debt

Get instant access to
all materials

Become a Member