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Business Terms and Definitions


Business Terms and Definitions

Macroeconomics - looking at the whole economic picture

Microeconomics - looking at one particular part of the economy, such as an individual business.

Fiscal Policy - Use of government revenue collection and spending to influence the business cycle.

Monetary poilcy - Governmen policy and actions taken by the Federal reserve board to regulate the nations money supply (Interest rates, Alan greenspan)

Shareholder - person who buys stock in another company

Alien Company - a company that is incorporated in one country but operates in another.

Foriegn Company - A corporations that is incorporated in one state but operates in another.

Type of competition where no one firm or groups of firms is large enough to influence the economy - pure competition

Golden Parachute - benefits for executives if their job is ever taken away

Shark Repellant - Heavy stock holders must vote before a hostile take over attempt.

White Knight - A person who buys stock to prevent a take over attempt.

Poison Pill - something that makes the company look less attractive to avoid a hostile takeover.

Franchising - A marketing system revolving around a two party legal agreement, whereby the franchise conducts business according to terms specified by the franchisor.

Franchisee - an entrepreneur whose power is limited by a contractual relationship with a franchising organization.

Franchisor - The party in a franchise contract who specifies the mothods to be followed and the terms to be met by the other party.

Franchise Contract - The legal agreement between the franchisor and the franchisee

Franchise - The privilages in a franchise contract. The ability to use another companies product to sell through the franchise.

Product and trade name franchising - a franchise relationship granting the right to use a widely recognized product or name.

Business format franchising - an agreement whereby the franchisee obtains an entire marketing system and ongoing guidance from the franchisor requirements.

Master Licensee - a firm or individual acting as a sales agent with the responsibility for finding new franchisees within a specified territory.

Multiple Unit Ownership - a situation in which a franchisee ownd more than one franchise from the same company.

Area Developers - individuals or firms that abotain the right to open several franchised outlets in a given area

Piggyback Franchising - the operation of a retail franchise within the physical facilities of a host store.

Uniform Franchise Offering Circular (UFOC) - a document accepted by the Federal Trade Commision as satisfying its franchise disclosure requirements.

Plusses and Minues of Franchising

Pluses
- formalized training
- financial assistance
- proven marketing methods
- managerial assistance
- quicker startup time
- overall lower failure rates

Minuses
- franchise fees
- royalties
- restrictions on growth
- less independence in the operation
- franchisor may be sole supplier of some supplies
- termination / renewal clauses

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