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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
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