Business ownership (part 2)

• What is the purpose of a partnership agreement?

  To outline how the partnership will run
• What key elements are included in a partnership agreement?

  Who, investment amount, profit share, voting rights
• What is the aim of a partnership agreement?

  To prevent arguments between partners
• What does the Memorandum of Association include?

  Business name, activity, registered office, number of shares
• What does the Articles of Association cover?

  Shareholders' voting rights, profit share, AGH running
• What is a key factor in determining the best type of ownership?

  It depends on various business factors
• What happens when an unincorporated business goes bankrupt?

  It has liabilities exceeding its assets
• What does liquidation mean for an incorporated business?

  It has liabilities greater than its assets
• What factors influence the speed of setting up a business?

  Level of risk involved and ownership type
• What does "divorce of ownership and control" refer to?

  Separation between owners and business management
• What happens to assets during liquidation?

  Assets are sold to pay liabilities
• What is the role of administration in a business?

  A bank runs day-to-day operations to prevent liquidation
• What is franchising?

  An existing business sells rights to use its model
• What does a franchisee pay to the franchisor?

  A share of its profit as royalty payment
• What support does a franchisor provide?

  Training, marketing, and initial fee assistance
• How is a franchise agreement characterized?

  More of a marketing agreement than a business
• What is an initial fee in franchising?

  Payment made to start the franchise
• What is the relationship between franchisor and franchisee?

  Franchisor provides model, franchisee operates
• What is the role of shareholders in a company?

  They own shares and vote on decisions
• What is the process of shareholder meetings?

  Annual meetings to discuss company performance
• What are the implications of business failure on stakeholders?

  Loss of investment and potential job loss
• What are the differences between incorporated and unincorporated businesses?

  Incorporated businesses have limited liability
• What are the legal requirements for starting a franchise?

  Franchise agreement and compliance with laws
• What are the financial obligations of a franchisee?

  Paying initial fees and ongoing royalties
• What is the impact of franchising on local economies?

  Creates jobs and stimulates local business
• What are the advantages and disadvantages of franchising for both parties?

  Advantages: brand recognition; Disadvantages: limited control
• What is a sole trader?

  A business owned by one person
• What is a partnership?

  A business owned by two or more people
• What is a public limited company?

  A company that sells shares to the public
• What is the legal structure of a sole trader?

  Unincorporated with unlimited liability
• What is the legal structure of a partnership?

  Unincorporated with unlimited liability
• What is the legal structure of a public limited company?

  Incorporated with limited liability
• Who owns a sole trader business?

  The individual owner
• Who owns a partnership?

  Two or more partners
• Who owns a public limited company?

  Shareholders
• What type of finance can a sole trader use?

  Personal assets and loans
• What type of finance can a partnership use?

  Personal assets and loans
• What type of finance can a public limited company use?

  Share capital and loans
• What tax does a sole trader pay on its profit?

  Income tax
• What tax does a partnership pay on its profit?

  Income tax