part 1

• Type of business ownership

  The legal structure that the business chooses to operate with
• Type of business ownership is a crucial element of setting up a business and one which entrepreneurs must think very carefully about
• Options for business ownership

  • Sole trader
  • Partnership
  • Private limited company
  • Public limited company
  • Franchise
• Sole trader


  • Owned and controlled by one person
  • No separate business entity, personal and professional assets/liabilities not distinct
  • Personally liable for business debts
  • Easy to set up
  • Complete freedom to make decisions
  • Low startup costs
  • Keeps 100% of profits
• Partnership


  • Owned by two or more people
  • Unlimited liability shared between partners
  • Shared expertise and teamwork
  • Low startup costs
  • Greater borrowing power
  • Potential for disagreements over decisions
• Private limited company


  • Owned by shareholders, typically directors
  • Separate legal entity from owners
  • Owners not personally liable for business debts
  • More tax efficient than sole trader/partnership
  • Greater admin costs and legal requirements
• Public limited company (PLC)


  • Owned by shareholders, run by directors
  • Limited liability
  • Can offer shares to public via stock exchange
  • More legal requirements and paperwork than other options
  • Potential to lose control of business
• Franchising


  Acquiring a proven business model and using its brand/products to open a new store
• Franchisee


  • Purchases rights to franchise from franchisor
  • Benefits from proven system, training, economies of scale
  • Pays initial fee and ongoing royalties to franchisor
  • Restricted in changes/improvements to business
• Franchisor


  • Person/company that owns trademark and business model
  • Receives payments from franchisee