Zappa's clarity is refreshing. Thanks RogT!
Business formation focuses on LAWS and ACCOUNTING. Any form of or even lack of a form can make or lose money. This is why lawyers and the accountants run the world!
The reality beyond the enjoyable yet oversimplifed discussions is that trying to understand who owns what is baffling. This can easily be seen by picking any large global corporation and then going to their web site. Go to their Investor Relations. Look at their annual report.
The Company franchises and operates McDonald’s restaurants.
Of the 32,478 restaurants in 117 countries at year-end 2009, 26,216 were operated by franchisees (including 19,020 operated by conventional franchisees, 3,160 operated by developmental licensees and 4,036 operated by foreign affiliated markets (affiliates)—primarily in Japan) and 6,262 were operated by the Company. Under our conventional franchise arrangement, franchisees provide a portion of the capital required by initially investing in the equipment, signs, seating and décor of their restaurant
businesses, and by reinvesting in the business over time.
The Company owns the land and building or secures long-term
leases for both Company-operated and conventional franchised restaurant sites. This maintains long-term occupancy rights, helps control related costs and assists in alignment with franchisees. In certain circumstances, the Company participates in reinvestment for conventional franchised restaurants. Under our developmental license arrangement, licensees provide capital for the entire
business, including the real estate interest, and the Company has no capital invested. In addition, the Company has an equity investment in a limited number of affiliates that invest in real estate and operate or franchise restaurants within a market.