The Sonic Franchise
Choosing a Form of Business Ownership
Introduction to Business
Prof. Benjamin Zuckerman
August 2, 2012
When Sonic first opened it was a sole proprietorship which is a business that is owned, and usually managed, by one person1, then it became a partnership which is a legal form of business with two or more owners2, then a corporation which is a legal entity with authority to act and have liability apart from its owners3, and then a franchisor which is a company that develops a product concept and sells other the right to make and sell the products4.
I don’t think Sonic would have grown as large as it did today if it remained a sole proprietorship because there would have not been any national exposure. With it being a sole proprietorship there would have been only one owner and managed by one person. Therefor it would remain in one town and be a great business for that one town. It would not have made it worldwide just being owned by one person.
With Sonic going through so many forms of business ownerships there were advantages and disadvantages. The advantages to Sonic with being a sole proprietorship was the pride of owning a business, the ease of starting a business and leaving a legacy for future generations. The disadvantages to Sonic being a sole proprietorship were risk of personal loss, management difficulties, and limited growth.
The advantages to Sonic being a partnership was that the shared responsibility of management was with two people instead of one, the resources was endless, and it provided longer survival. The disadvantages to Sonic being a partnership were disagreements with partners, termination difficulties, and all profits had to be divided.
The advantages to Sonic being a corporation was separating ownership from management were easy, the size of the company grew, and the easiness of ownership change. The disadvantages to Sonic being a corporation was the extensive paperwork, the possible.