I shall be contrasting two different ownerships and analysing what would happen to one of the business if it were to decide to change ownership type i.e. limited company franchise.
Sole Trader- A sole Trader is someone who is Self-employed and owns their own business. Sole Traders can employee others that are specialist in the particular field such as a carpenter for a wooden furniture company, as well as this sole traders are not separate entities from their business (unlimited liability) this means that the owner will be accounted for any debts in which the business may encounter. Sole traders also benefit as they only need to invest a small amount of capital which reduces initial start-up costs. (http://www.bbc.co.uk/schools/gcsebitesize/business/aims/limitedcompaniesrev1.shtml) However being a sole trader has its disadvantages. Sloes traders are usually owned small business with a small amount of employees this evidentially leads to longer hours due to shortage of staff.
Partnership- A partnership as the name suggests is a coming together of two or more people to run a business. A partnership as opposed to a sole trader is a separate entity from the business. A benefit of a partnership is an increase in the businesses money pool as each individual can contribute. However much like sole traders partnerships have their drawbacks such as all money generated from the business (profit) must be shared this can lead to disputes which can endanger the future of the business. Last but not least partnerships have unlimited liability this means partners will be accounted for any debts and errors within the business. (http://www.how-to-start-a-business-guide.com/partnership-advantages.html)
Limited company-There are two different types of Limited companies a private limited company (ltd) and public limited company (plc).
A private limited company is usually a small business i.e. an independent retailer. Private limited company’s offer legal protection for its shareholders this prevents any hostile takeovers (http://www.businessdictionary.com/definition/private-limited-company.html) .Private limited companies are less likely to be taken over as they can decide who buys their shares. Private limited companies also have limited liability this is when members of the company can’t be held responsible for the company’s debts or liabilities. Limited companies have shareholders, shareholders are unable to offer their shares to the general public and shareholders can’t be more than a set figure. All limited companies must register with company’s house (Central register of UK companies
A public limited company is a company that can offer its shares to the general public through the stock exchange. Public limited companies can only be registered if they generate an annual turnover of £50,000.Shareholders of a public limited company are only limited to potentially louse the amount they have paid for their share.
Franchise- A Franchise is a company (Franchisee) who have the licence to approach other business (Franchisor) in doing so it allows other business people to operate under the same name. Benefits of a Franchising are The Franchisee gives you support- training, advice, instructions. Financing would become easier as banks know that the business is well established one risks
Within the business would be spread much easier as franchises are very large companies. However franchising does have it disadvantages, by becoming part of the franchise you will lose some control as opposed to if you were a sole trader you will louse things such as choosing the layout of your business. Other franchisees may create a bad reputation thus affecting the amount of customers your particular business gets. Lastly the initial costs of buying into the franchise will cost a considerable amount of money and after you have finished paying and you are now recognised as part of the business you will then have to continue paying…