Section 4 Other Organizations
Preview
Objectives
After studying this section you will be able to:
- Understand how a business franchise works.
- Identify the different types of cooperative organizations.
- Understand the purpose of nonprofit organizations, including professional and business organizations.
Section Focus
Some organizations exist to aid business owners, consumers, producers, industries, workers, or society at large. Many operate without the aim of earning a profit.
Key Terms
- business franchise
- royalty
- cooperative
- consumer cooperative
- service cooperative
- producer cooperative
- nonprofit organization
- professional organization
- business association
- trade association
Why would a person with dreams of running her own business turn to a multinational company for help? Why would a customer pay a fee for the privilege of shopping at a certain store? Why would an organization have no intention of earning a profit at all?
There are sound answers for all of these questions. As you read this section, you will discover many kinds of organizations that serve many kinds of interests. You are probably already familiar with a number of them.
Business Franchises
In Chapter 7, you learned about franchises issued by government authorities. These franchises give only one firm the right to sell its goods within a limited market, such as within a national park. In business, too, a franchise signals exclusive rights. A business franchise is a semi-independent business that pays fees to a parent company. In return, the business is granted the exclusive right to sell a certain product or service in a given area.
Parent companies are called franchisers. The franchiser develops the products and business systems. They then work with the local franchise owners to help them produce and sell their products.
The image that leaps to mind when discussing franchises is the fast-food restaurant. However, franchises offer a wide array of goods and services, from diamonds to day-care centers.
Competing restaurant franchises often cluster together along highways.
Table of Contents