Types of business Flashcards
Depends on if the franchise is set up as a sole trader, partnership or company.
Franchise
simple and inexpensive to set up
partners bring more money and skills
share all losses
Partnership advantages
unlimited liability
suffers all losses
difficult to take holidays or leave
sole trader disadvantages
a business owned and operated by 1 person.
Sole trader
responsible for business debts. Their personal assets may need to be sold to meet outstanding business debts.
Unlimited liability
A business which has at least 5 members with shared management and equal voting rights. It is a separate legal entity.
Cooperative
unlimited liability
profits must be shared
disputes between partners
ceases if partner dies, leaves or retires.
Partnership disadvantages
Expensive to set up and operate
Complex reporting requirements
Company disadvantages
inexpensive to register
Equal voting rights
Limited liability
No minimum age limit of members
Cooperative advantages
Franchisor controls decisions and operations
Paying ongoing fees to the franchisor
Profit must be shared with franchisor
Franchise disadvantages
limited liability
can raise lots of money through shareholders
unlimited life change in shareholders doesn’t crease business
run by board of directors not the shareholders
Company advantages
Members are limited to the value of their investments for business debts.
Cooperative limited liability
simplest to set up
control over all decisions
keeps all profit
fewer gov requirements
sole trader advantages
A business or person (franchisee) buys the right to use the name, products and services of an existing business (franchisor)
Franchise
shareholders are limited to the value of their shares for any business debts. No personal assets can be sold.
Company limited liability.
Established reputation, products or service, and store layout
Advertising and marketing support
Franchisor provides training
Franchise advantages
a business owned and operated by 2 to 20 partners.
Partnership
A business which has a separate legal entity from its shareholders. A public company has a minimum of 1 shareholder. A proprietary (private) company has 1-50.
Company
