Venetian Ices Ltd
In 1948 Toni Seghini left Italy to settle in London. It was here that the ice cream business, he soon started, became successful. Toni started out with a small factory that supplied ice cream and also ran an ice cream van. Toni was a sole trader, which meant his business was a sole proprietorship. Being a sole trader meant that Toni would keep all the profit made by the business and was able to take a day off work whenever he wanted.
The business was easy to set up, as not much money was needed, and easy to run, as no agreement was needed from other owners. A disadvantage of being a sole trader was that he had unlimited liability. This meant that Toni had to settle all the debts of the business, as there was no distinction between the assets and debts of the business than those of the owner. If Toni took a day off it would mean that he would lose out on money due to the business not being run.
During the 1950’s Toni’s business became very successful due to the rapid growth of his sales. But on 1955 the ice cream industry experienced problems when the government introduced the new Food & Drugs Act. This lead to the financial suffering of many small businesses, as they were to meet the required changes. Toni was quick to act and created Venetian Ices Ltd. Toni’s sole proprietorship had now become a private limited company.
The company’s owners were now shareholders. Each year at an Annual General Meeting the shareholders elect a board of Directors to represent their interests. The Directors then appoint managers to run the day-to-day procedures of the business. The owners (shareholders) of Venetian Ices Ltd now had limited liability, which meant that they were liable for the debts of the company only up to the value of their shares. This was an advantage for Toni, as the limited liability would attract more shareholders. Another advantage was that Toni didn’t need much money to start this company, which meant it was quicker to run. A disadvantage to Toni was that the company’s affairs could no longer be private but open to the general public.
Then in 1962 another problem was faced by the ice cream industry when a tax was put on the ice cream. Sales fell dramatically but only for a short time; however, this was too long for smaller firms, which went out of business. In order to take advantage of this situation the Directors of Venetian Ices Ltd agreed to introduce franchising into the mobile selling part of the business. This meant that Venetian Ices Ltd would gave the right to other businesses to sell its products using its brand name.
The businesses that the right was given to are known as Franchisees, which means Venetian Ices is the Franchisor. An advantage for the franchisor is that the franchisee puts up money at the start and during the running of the business. This means that the franchisor doesn’t have to find the money to run its business. An advantage for the franchisee is that it is provided with all the equipment and material needed and an exclusive area in which to sell the ice cream, by the franchisor. Another advantage for the franchisee is that the franchisor provides a whole range of back up services such as advice, loans and insurance cover. A disadvantage to the franchisee is that it does not have the freedom to operate, as ordinary businesses would have. In particular, the franchisee cannot sell the business without the permission from the franchisor.
The franchising scheme was enormously successful for Venetian Ices Ltd. In 2000 Stephanie Wallace, the marketing director, was convinced that there was a real business opportunity in supplying ‘own label’ take home ice cream to the large supermarkets. This meant that the product was sold under the brand name of the supermarket rather than under the name of the business, which manufactures the product (Venetian Ices).