Forms of business part 2

Question 1

What are franchise?

Answer 1

a business (franchisor) allows another business (franchisee) to trade under their name

Question 2

What are the pros and cons to a franchisees of franchising?

Answer 2

pros- lower risk, franchisees get support from the franchisor, can benefit from national marketing campaigns

cons- franchisees profit is shared with the franchisor, reduce independence and must abide by strict rules

Question 3

What are the pros and cons to franchisor of franchising?

Answer 3

Pros- fast method of growth

Cons- poor franchisees may damage reputation, cost is supporting franchisees may be high

Question 4

What are public limited companies?

Answer 4

owned by shareholders, where the shares can be traded openly on the stock market

Question 5

What are the pros and cons to public limited companies?

Answer 5

pros- huge amount of money can be raised, production costs may be low due to EOS, can dominate markets, limited liability

cons- high set up costs, anyone can buy shares so possible to loose control to an outsider, members of public can inspect finical accounts, loss of ownership/ control

Question 6

What’s unlimited liability?

Answer 6

legal status which means that the owner of a business is personally liable for all business debts

Question 7

What are non profit organisations?

Answer 7

Any profit made is put back into the business

Question 8

Pros and cons of franchising?

Answer 8

Pros- can expand, less risks like diseconomies of scale

Cons- doesn’t have control, if a single franchise is run badly then can affect the brand image