Forms Of Business Flashcards
What is a sole trader?
A sole is a person who runs their own business
What are three advantages of being a sole trader
Easy to form
Decisions made quickly
Can keep the profits
What are three disadvantages of being a sole trader?
Unlimited liability
Responsible or all decisions
May have to work long hours
What is a partnership?
A partnership is when between 2 and 2 people set up a business together with a view to make a profit
What are three advantages of a partnership?
A group of people can contribute more money than one person
A group will have a wider range of skills
Work shared between group
What are three disadvantages of a partnership?
Unlimited liability
Disagreements can happen
Profits shared between partners
What is a private limited company?
When between -19 people start a new business together which has limited liability.
What are the people who put money into a private limited company called?
Shareholders
What are three advantages of a private limited company?
Owners have limited liability
Can get more finance
Work shared
What are two disadvantages of a private limited company?
More difficult to set up
Profits shared
What is a franchise?
A franchise is an agreement whereby one person is given permission to set up a branch of another person business in return they pay a percent of their sales
Who is a franchiser?
Original owner of business
Who is the franchisee?
New organisation that takes on the franchise agreement
What are three advantages of a franchise?
Less risk
Receives support from original owner
Customers already know about the business
What are three disadvantages to a franchise?
Must pay a fee and percent of profits
Does not have total control over business decisions
If one branch gets a bad name it could affect others
