Sole Trader, Partnerships, Social Enterprises And Franchises

Question 1

Who are innovators?

Answer 1

Someone who introduces changes and new ideas (entrepreneurs)

Question 2

What does unincorporated mean?

Answer 2

Businesses where their is no legal difference between the owner and the business.

Question 3

What does incorporated mean?

Answer 3

Businesses that have a separate legal identity from its owners.

Question 4

Features of a sole trader

Answer 4

A sole proprietor; owned by a single person that can employ any number of people.

Question 5

What does unlimited liability mean?

Answer 5

The owner of the business is personally liable for all business debts.

Question 6

Pros of a sole trader

Answer 6

• owner keeps all the profit
• owner has complete control
• no legal requirements

Question 7

Cons of a sole trader

Answer 7

• unlimited liability
• Too much respect
• no continuity(the business dies with the owner)

Question 8

What does the deed of partnership state?

Answer 8

owned between 2-20 people

> how much capital each partner will contribute
how profits(and loses) will be shared among owners
the procedure of ending partnerships
how much control each partner has.
rules for taking new partners.

Question 9

What does deed of partnership mean?

Answer 9

The legal document that state the formal rights of partners.

Question 10

Pros of partnership

Answer 10

• easy to set up
• responsibility is shared
• More capital can be raised

Question 11

Cons of partnership

Answer 11

• unlimited liability
• profit has to be shared
• partners may disagree and fallout

Question 12

What are limited partnerships?

Answer 12

Partnership where some partners contribute capital and enjoy a share of the profit but take no part in running the business.

Question 13

What is limited liability?

Answer 13

The business owner is only liable for the original amount of money invested in the business.

Question 14

What is a franchise?

Answer 14

It is a structure in which the owner(the franchisor) allows another operator(the franchisee) to trade goods under their name.

Question 15

What does the franchisor offer the franchisee?

Answer 15

>a license to trade under the franchisor
>a start- up package
>training 
>marketing support 
>an area to operate the business

Question 16

What are the fees the franchisee has to pay?

Answer 16

> a start up fee
an ongoing fee
contribution to marketing costs

Question 17

Advantages to franchisee

Answer 17

• less risk
• back up is given
• set up costs are predictable

Question 18

Disadvantages to franchisee

Answer 18

• profit is shared with the franchisor
• strict contracts have to be signed
• can be an expensive way to start a business

Question 19

Advantages to franchisor

Answer 19

• Fast method of growth
• cheaper method of growth
• franchisee take some risks
• franchisee are more motivated than employees.

Question 20

Disadvantages to franchisor

Answer 20

• potential profit is shared
• poor franchisee may damage brand’s reputation
• franchisees may get merchandises from somewhere else
• cost for support to the franchisee’s can be expensive.

Question 21

Features of social enterprise

Answer 21

=have a clear social and environment mission
=generate most of their income through trade or donations
=reinvest most of their profits
=are accounted and transparent