A description of the type of business – Sole trader

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A franchise is the right to trade using a successful company’s products and image. The franchiser offers the franchise. The franchisee buys or leases the franchise. The franchiser expands their business without the burden of debt. The franchisee pays a royalty fee to and other payments are made to the franchiser. Franchisers maintain control over most of the business. Franchisees are generally better motivated because of the profits they will receive. A franchise has a limited liability because the franchisee is separately run from the franchiser.

The franchisee takes full responsibility for the running of that branch, so they provide the money and pay the debts, the franchiser doesn’t deal with that, they earn their profit by selling their name to entrepreneurs that want to be a franchisee. Advantages: You are selling a name to the public so there is little required to promote your business. You get advice from the franchiser and you get a prospectus on what to do and what they expect. If you start up a new McDonalds branch you would generally not have a lot of competition because Burger King tend not to set up near one due to the success of McDonalds. Disadvantages:

You would have to pay the franchiser royalties and a percentage of the profit. Co-operative: A co-operative is a business owned and run by its members. Each member can vote at meetings, receive a share of the profits and get involved in decision making. There are two main types, one is a worker co-operative and the other is retail. The worker co-operative is generally formed by a workers buyout when a company is in danger of closing. They may also be formed by groups of workers to share facilities. Workers may buy supplies as a group and then share equipment. Retail co-operative societies (CRS) are owned by a local or regional CRS.

The retail societies buy many of their goods from the co-operative wholesale society, which is entirely owned by the retail societies, they also share any profit they then make. Generally co-operatives have a higher potential for the workers rather than the profit of shareholders, because the people owning it have a high interest in the business as a whole. The retail co-operative has been declining for years though. Advantages: Each worker and owner has a say in the business. And each has a vote for the decision-making. Each person receives an equal share of the profits This has job rotation so you are not stuck doing the same job.

You are not forced to be an owner. You make the decision yourself. Disadvantages: There is no single owner so banks and investors are hesitant about dealing this form of business. Suppliers might not want to sell on credit; they might want the money straight up. The decision-making can take a long time if everyone is involved. Company: There are two types of companies, one is a private limited company (LTD) and the other is a public limited company (PLC). A LTD is a limited company, which means they have limited liability hence the term limited in the name. It is a company in which the shares cannot be sold to the general public.

They are often small companies with all the shares owned by the members of a family. The company name must end with a ‘Limited’ or ‘LTD’. To become private limited company the owners must apply to the registrar of companies. PLC is a company in which has limited liability, whose shares can be brought and sold by the public. The company has no control over who buys its shares. The ownership by the shareholders of the company is separated from the control by the board of directors. In LTD the shares are generally not listed on the stock market, all directors can only sell these on agreement.

Generally families or a small group of friends runs these. A PLC is the largest form of privately owned organizations in the U. K. The Tussauds Group is also a PLC. Advantages for a LTD: Has limited liability. No one can lose more than the capital invested. Can choose the shareholders Owners keep control over the company. Disadvantages: Shares aren’t on the stock market so it is hard for shareholders to get their money back. There is a limited amount of money to be raised by family and friends. That amount would be around i?? 25,000 up to i?? 50,000. Advantages for PLC:

Shareholders are willing to invest in this type of company because shareholders find it easier to receive their money back. Banks are more willing to lend to companies with a large share capital. Large amounts of capital can be gathered in this type of organisation. They are enabled to gain economies of scale. Disadvantages: Shareholders have little say in the business as a whole They are generally subject to takeover bids because they don’t have the power to prevent other organizations from buying their shares, this is done by buying the majority of shares and then as the main shareholder you can buy the business if required.

When a private company goes public the original shareholders may lose control of the company. Public Sector: All activities carried out by either national or local government. It is made up of two parts: Trading bodies set up to sell a product or services to the public The part set up to provide services to the public. The public sector in Britain relates to all the institutions, which are owned, and run by the state (an organisation of businesses that are grouped together) and are overseen by the government. These include: Central government offices Local authorities Public corporations

In this kind of organisation the funding comes from the government and it is raised through taxes and these are some of the factors that affect the increase of taxes. Task 2/ P2: Write a brief description of the industrial sector(s) that each business is part of: Waitrose and the Tussauds Group are part of the tertiary industry. The tertiary industry is the part of the economy that supplies services to other industries and to the public. It is the third stage in production. This is made up of companies that sell and distribute goods produced by the extractive (Primary) and manufacturing (Secondary) industries.

It also includes all other services such as banking and insurance. The secondary industry is the manufacturing or processing industry. It also includes construction and providers of gas, water and electricity. It receives raw materials from the extractors and changes them into something else. This industry may also combine several manufacturers’ products to make something else. The primary industry is made up of the industries that use natural materials. Mining, fishing, forestry and farming are examples of this. They then sell on the materials to the manufacturers.

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