Topic 1.4
1.4.1
Unlimited liability The owners of the business is personally liable for the
business’s debts
Hard to start the business
Quick to set up.
Financial info is kept private.
Includes: sole traders, partnership
Limited liability The owners of the business is NOT personally liable for the
business’s debts
More complex to set up than unlimited liability businesses.
Financial information is published and can be accessed by
others.
Easier to raise finance.
Includes: Private Ltd, Public Ltd
Franchise The joint venture between a franchisor and a franchisee.
The franchisor is the original business. It sells the right to use
its name and idea.
The franchisee buys this right to sell the franchisor's goods
or services under an existing business model and trademark.
Benefits of running a franchise Drawbacks of running a franchise
● Good brand image and ● The cost of initial investment can
reputation established. be high.
● Expensive marketing costs ● Franchisees have little freedom
covered by the franchise. to make decisions.
● Products are already tried and ● Franchisee has to pay royalty(%
tested so may already have a of revenue) to the franchisor.
customer base. ● Restrictions on where the franchise
● Higher chance of survival than a can be set up.
new business.
● Specific support and training
provided.
1.4.1
Unlimited liability The owners of the business is personally liable for the
business’s debts
Hard to start the business
Quick to set up.
Financial info is kept private.
Includes: sole traders, partnership
Limited liability The owners of the business is NOT personally liable for the
business’s debts
More complex to set up than unlimited liability businesses.
Financial information is published and can be accessed by
others.
Easier to raise finance.
Includes: Private Ltd, Public Ltd
Franchise The joint venture between a franchisor and a franchisee.
The franchisor is the original business. It sells the right to use
its name and idea.
The franchisee buys this right to sell the franchisor's goods
or services under an existing business model and trademark.
Benefits of running a franchise Drawbacks of running a franchise
● Good brand image and ● The cost of initial investment can
reputation established. be high.
● Expensive marketing costs ● Franchisees have little freedom
covered by the franchise. to make decisions.
● Products are already tried and ● Franchisee has to pay royalty(%
tested so may already have a of revenue) to the franchisor.
customer base. ● Restrictions on where the franchise
● Higher chance of survival than a can be set up.
new business.
● Specific support and training
provided.
