Business Ownerships Flashcards
1
Q
SOLE TRADER
A
- 1 owner
- any no. of employees
- unlimited liability
2
Q
PARTNERSHIP
A
- 2-20 owners
- any no. of employees
- unlimited liability
3
Q
FRANCHISE
A
- where business allows another business to trade under their name
- method of business growth
4
Q
PRIVATE LIMITED COMPANY (LTD)
A
- owners are called shareholders (fam & friends)
- limited liability
- legal process required
- controlled by Board of Directors
- run by Managing Directors
- max. share capital is £50,000
5
Q
PUBLIC LIMITED COMPANY (PLC)
A
- shareholders (shares sold to members of the public via stock exchange)
- limited liability
- legal process required
- controlled by Board of Directors on behalf of shareholders
- run by Managing Directors
- min. share capital is £50,000
6
Q
SOLE TRADER ADVANTAGES
A
- own boss
- owner keeps all profit
- make own decisions
- easy to set up
7
Q
SOLE TRADER DISADVANTAGES
A
- unlimited liability
- no one to share opinion with
- no continuity of existence
- no one to cover
- have to raise own capital
8
Q
PARTNERSHIP ADVANTAGES
A
- shared decision making
- increases capital invested
- partners can specialise
- easy to set up
9
Q
PARTERSHIP DISADVANTAGES
A
- unlimited liability
- profits shared
- no continuity of existence
- partners may disagree
- limited finance
10
Q
FRANCHISEE ADVANTAGES
A
- established name
- support of franchisor
- sales are guaranteed
11
Q
FRANCHISEE DISADVANTAGES
A
- lack of total control
- royalties (% of profit) payed annually
12
Q
FRANCHISOR ADVANTAGES
A
- quick way to grow
- royalties from franchisee
13
Q
FRANCHISOR DISADVANTAGES
A
- risk of reputation from unsuitable franchisee
14
Q
PRIVATE LIMITED COMPANY ADVANTAGES
A
- limited liability
- increased capital (shares)
- limited liability (separate identity)
- specialisation - functional areas
15
Q
PRIVATE LIMITED COMPANY DISADVANTAGES
A
- complicated to set up
- legal formalities
- loss of individual control
- shareholders receive dividends (shares)
- accounts published annually (competitors)
