Sonics Growth

1 January 2017

First, let us take a look at some business terms. A sole proprietorship is a business that is owned and operated by one person. A partnership is a legal form of business with two or more owners. A corporation is a legal entity with authority to act and have liability apart from its owners. A franchisor is a company that develops a product concept and sells others the rights to make and sell the products. (Nickels) A man named Troy Smith began the sonic drive-in restaurant in 1954, as a sole proprietorship.

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Two years later, he took on a partner, and watched the business grow. As partners, they shared profits and liabilities. After the death of Smith’s partner, he found many people wanted to franchise the business. The Sonic drive-in restaurant began to grow even quicker. A man named Cody Barnett took over his father’s seven franchises. He added fifteen more to those. Understanding the different types of business is vital in getting it started and adjusting to the growth of the business. (Nickels)

The Sonic Company would not have been able to grow as large as it is now if it had remained a sole proprietorship. As it grew, it would have been too much for one person to manage. The liability would have been too great for one person to handle. With sole proprietorship, the personal assets of the sole proprietor can be used to pay off business debt. The sole proprietor is held personally liable. With sole proprietorship, the advantages are that they are easy to start up, they have tax benefits, and they don’t have to share the profit.

The disadvantages are unlimited liability, less opportunity for earnings, decreased chance of others investing in the business, and a limited access to resources. The advantages of a partnership are more available resources, tax benefits, and personal appeal. The other advantage is that the liability is shared among the partners, instead of one person being completely liable as with sole proprietorship. The disadvantages are still unlimited liability, the division of profits among partners, and higher potential for conflict.

The advantages for corporations are limited liability, the opportunity for increased earnings; they have access to more resources, tax benefits, and personal appeal. Advantages with franchises are more management and marketers available, personal ownership, nationally recognized name, more financial advice and assistance, and there is a lower failure rate. The disadvantages are the large start-up fees, the shared profit, high management regulations, other franchisees have effects on your future growth and profit, the restriction of selling the owners product, and the unfortunate abuse of fraudulent franchisors. Nickels)

What makes Sonic more successful than other restaurants is, for more than 50 years, Sonic has established a leading position in the drive-in restaurant business. They did it by keeping to the made-to-order American Classics, signature menu items, the swift service of friendly Carhops, and heaping helpings of fun and personality. Because of this, Sonic is the largest chain drive-in restaurant in America.

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