Define
A partnership
is a form of business in which two or more people agree to jointly own a business
A person or business buying the franchise
A franchisee
Sole Trader
1.No one to discuss business decisions with
2.Unlimited liability
3.Limited resources
4.Business may remain small
5.Illness of owner will affect business performance
Sole Trader
1.Few legal issues in setting up
2.You are your own boss
3.Freedom to choose holidays
4.Close relationship with customers
5.Does not share profit
6.Can keep business information private
Unlimited liability
means that the owners of business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.
A payment made by the franchisee to the franchisor based on the sales turnover of the franchise
A royalty fee
Partnership
1.Unlimited liability
2.Business does not have a separate legal entity
3.Partners can disagree on decisions
4.If one partner does something wrong the others can suffer
5.Partnerships are limited to 20 partners so they cannot grow
Partnership
1.More money to invest between partners
2.Responsibility of run business is divided
3.Partners motivate each other to make profit
Incorporated Business
are companies that have separate legal status from their owners
•The business who offers to franchise to other businesses its trading methods, products and business logos e.g. Pizza Hut, Subway, Clarks Shoes Businesses want to grow
The franchisor
Private Limited Company
1.Lots of legal agreements have to be managed
2.Shares cannot be transferred or sold to someone else - people may not want to buy shares in a company like this
3.Company accounts are not secret
4.Cannot sell shares publicly to grow
Private Limited Company
1.Shares can be sold to friends and friends of friends leading to more money and growth
2.Shareholders have limited liability
3.You can control the amount of shares you sell
Joint venture
Where two or more businesses start a new project together, sharing capital, risk and profits
occurs when two or more businesses agree to start a new project together, sharing the capital, the risks and the profits.
A joint Venture
Public limited Company
1.Significant Legal paperwork & expensive process
2.Sharing financial accounts publicly (including directors’ salaries & detailed operating reports)
3.Dilution of control
Public Limited Company
1.Can raise significant amounts of finance
2.Can grow & expand significantly
3.Limited liability
4.There is no restrictions to buying, selling, or transfers of shares
Usually has high status and can attract suppliers prepared to sell goods on credit
Public Corporation
is a business in the public sector that is owned and controlled by the government
Are payments made to shareholders from the profits (after tax) of a company. they are the return to shareholders for investing in the company.
Dividents
Operating a franchise
•Less control for the franchisee as they will have to run the promotions & products that are currently being advertised
•Franchisee has to pay royalties to the franchisor, in addition to regular business expenses
Operating a franchise
•Group promotional activity on a national, even a worldwide basis
•Market research done at Head Office level
•Training, support & advice
•Well known brand name, products and reputation – existing loyal customers