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Types of Business (Sole
Trader (+2 people (owners) trading together
(e.g…
Types of Business
Sole
Trader
+2 people (owners) trading together
(e.g. doctors, dentist)
Needs deed of Partnership
-
Deed of Partnership
Who (names, addresses etc)
Trading name
Capital each partner invests
Division of profit between partners
Duties of partners
-
-
-
Partnership
Pros
Own decisions; own boss
Keeps the profits; Freedom
Easy set up; small start-up cost
(Small capital investment needed)
Easy to change plans; private
Cons
Long hours; Owner = business
Continuity needs owner present
Responsibility; no second opinion
Unlimited liability; personally liable
Owned and controlled by one person
e.g. specialist service (plumbers, hairdresser)
Can have employees
Cooperative
Leases brand name, product to a "franchisee"
Run by franchiser; funded by royalties
Royalties - Sum paid for use of franchiser's patent
A franchisee is less risky than independent retailer
Franchisee - adopts proven business model;
sells well known product in a new local branch
Franchiser = patentee (most times)
Cons
No prime location; hard work for franchisees
Franchisee - royalties; franchiser defines criteria for outlet
Lots of company policies; franchisee restrict; small control
Pros
Tested product; Well-known brand
Choose franchisee's outlet location
Franchisee - first hand support; training
Can afford higher start cost (high street location)
Banks like to give loans to franchisees
Franchise
Owned by workers
Run by board of directors
Funded by retained profits
Business owned jointly by members who share profits/benefits
Cons
Less appealing to investors, banks
Slow-decision making; Generic Marketing
Investment disadvantage;
share prices with competitors
Pros
Improves cooperation; democracy
Less tax, good atmosphere; no hierarchy
More engaged employees (more at stake)