FRANCHISE

A franchise is a business that uses the name, logo and trading systems of an existing successful
business.
FORMATION
A franchise is not strictly a form of legal structure for a business but it is a legal contract between
two firms. This contract allows the franchisee to use the name and logo and marketing methods
of the franchiser. The franchisee later decides independently which form of legal structure to
adopt.
CHARACTERISTIC
1) Proven Track Record
2) Little or no competition
3) Free of legal entanglement
FINANCING
A franchise is financed through commercial bank loans, SBA loans and alternative lending
agencies.
MANAGEMENT
A franchise is managed by the franchisee
ADVANTAGES
 Fewer chance of the business failing as an established brand and product is being used.
 Advice and training are offered by the franchisor.
 National advertising is paid for by the franchisor.
 Supplies are obtained from established and quality checked suppliers.

DISADVANTAGES

 There is no choice of supplier or suppliers to be used.

 Share profits or sales revenue has to be paid to the franchisor annually.
 Franchise license fee can be very expensive.
 Strict rules imposed over pricing and layout of the reduce owner’s control over there own
business.
 EXAMPLES

1. Kentucky Fried Chicken

2. Pizza Hut
3. Popeye’s
4. Burger King
5. Baskin Robins
6. Dominos
 PRIVATE LIMITED COMPANY
A private limited company is a business that is ownes and controlled by private individuals or
private groups of individuals.
FORMATION
A private limited company is formed between 2-50 members, each member is called a
shareholder.
CHARACTERISTIC
1) The main aim is to make a profit
2) Owned by private individuals
3) Shares are not available on the stock market
4) Dividends are paid to shareholders annually

FINANCING
Sourcing of finance are obtained through private investors, profits kept in the business or loans
from banks and other lending agencies.
MANAGEMENT
Private Limited companies are usually managed by a board of Directors or Shareholders

ADVANTAGES
 Shareholders are only liable for the amount that they invested in the business, thus they
have limited liability .
 Lower possibility of loss of control to outsiders
 The company has a separate identity from it’s owners
 Continuity of existence

DISADVANTAGES
 Raising of capital can be hampers as shares are not sold to the general public
 Profits have to be shared among a larger group of people
 Transfer of shares is limited by the approval of existing members
 Legal requirements may be time consuming and costly to implement
 EXAMPLES

1. MegaMart
2. Azan’s Super Center
3. Bashco Jamaica Limited
4. Fly Jamaica
5. Caribbean Cement
6. Jamaica Private power company
 PUBLIC LIMITED COMPANY
A public limited company comprises of an organization that can legally sell shares to the general
public and is register under the Company’s Act.
FORMATION
In order for a public limited company to be established a minimum of 7 shareholders must be
present. The company can have up to a hundred shareholders.
CHARACTERISTICS
1) Shares are sold on the stock market
2) Shareholders has limited liability
3) Separate entity from it’s owners

FINANCING
Finance is obtained through government loans and subsidies and profits kept in
the business.
MANAGEMENT
Managed by the shareholders or board of directors
ADVANTAGES
 Shares are traded on the stock market
 Shareholders has limited liability
 Continuity of existence

DISADVANTAGES
 Published accounts can be viewed by the public including competitors.
 Many legal requirements can be costly to implement and time
consuming.
 There is a risk od take over bids as shares are sold on the stock exchange.
 They can become large ,impersonal and difficult to manage.

EXAMPLES
1. Grace Kennedy Limited
2. Dolphin Cove
3. Gleaner Company Limited
4. Wington Wind Farm
5. Blue power group
6. Supreme Ventures Limited