Partnerships

1. Partnerships Katie Denshaw,Lauren Feher, Tom Garris, Sona Hussian

2. Types of Partnership General Partnership- most common type of partnership where all partners share equally in both responsibility and liability. Ex. Doctors, lawyers, accountants and small retail stores can form partnerships Limited Partnership- only one partner required to be a general partner, as in only one person has unlimited liability for the firm’s actions. Limited partners play no role in managing the busniess. Main drawback is the unlimited liability that general partner has. Limited Liability Partnership (LLP)- newer type recohignized by many states where all partners are limited partners. LLP functions like a general partnership except that all partners have limited personal liability. Not all types of businesses can register as limited liability partnerships.

3. Unlimited liability for both partners Separate taxable entity Authority divided Partners taxed on undistributed profits Partner deaths? Separate tax returns for business Advantages Disadvantages • Easy to organize • More financial strength • Added skills/judgement • Limited liability for individuals • Loss can offset other income for participating partners

4. A franchise is a semi-independent business that pays fees to a parent company, called the franchiser. The franchise is granted the right to sell a certain product/service in given area. Examples are a wide range of businesses, from fast food restaurant to stores that sell diamonds. Franchises allow each business owner, called a franchisee, a degree of control and the owners benefit from the support of the parent company. Disadvantages: • High franchising fees: buying into franchise is not cheap and franchisers charge franchisees a share of their earnings, or royalties. • Strict operating standards: franchisees must follow all the rules laid out by franchiser or they could lose the franchise • Purchasing restrictions: franchise owners must often buy supplies from parent company or approved suppliers. • Limited Product Line: franchise agreements allow stores to offer only approved products and franchisees cannot launch new product lines. Advantages: • Management training and support: franchisers help owners gain experience needed to succeed. • Standardized quality: parent companies require franchise owners to follow certain rules to guarantee product quality. • National advertising programs: parent companies pay for advertising to establish brand and increase sales. • Financial assistance: franchisers provide financing to help franchise owners to start business and can help people with few resources become owners. • Centralized buying power: franchisers buy materials in bulk for all of their franchise locations and pass on savings to their franchisees.

5. Famous Partnership: Microsoft In 1968, a computer club meeting about BASIC programming at Seattle's private Lakeside School brought Gates and Allen together. Allen went to work at Honeywell in Boston, and Gates went to Harvard. In the early 1970s, they began developing and selling their platform. A year later, Gates--who dropped out of Harvard-- and Allen formed Microsoft, which today is the world's largest software company.

6. Famous Partnership:Ben & Jerry’s The famous ice cream company that merged commerce with a social service got its start when Ben Cohen met Jerry Greenfield in seventh grade gym class in 1963. Fourteen years later, they paid $5 to take an ice cream making class.The following year, the pair invested $12,000 and opened their first Ben & Jerry’s Homemade shop in a renovated gas station. In 1984, the company reported sales topping $4 million. A year later, the company established the Ben & Jerry's Foundation to fund community-oriented projects with 7.5% of the company’s annual pre-tax profits. Today the partnership is franchised.