Module Title: Business Behaviours

Week Number: 2
Week Title: Legal Structures 1

PAGE – Week 2: Introduction

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Reading panel - Week Overview

Last week we learned about entrepreneurs and how they start their own business. This week
we explain the key features, benefits and disadvantages of setting up as a sole trader,
partnership, private limited, public limited company and a franchise. We then evaluate the
most appropriate legal structure for an entrepreneur setting up a new business.

(Alt text: A rocket with the words- strategy, target, vision, ideas, location and marketing- around it)

Freepik
Summary panel - Learning Objectives
By the end of this week, you will be able to:
1. Define a sole trader, partnership, private limited company and public limited company.
2. Explain the advantages and disadvantages of all 4 legal structures for businesses: sole
trader, partnerships, private limited companies and public limited companies.
3. Define a franchise, franchisee, franchisor.
4. Explain the advantages and disadvantages of being a franchisee and a franchisor.

Copy both the week title and learning objectives (LOs) into your learning folder – you will be
reflecting on these later in the week.

Glossary panel – Key Vocabulary

Also, by the end of the week, you should be able to define the following:
[Term] Sole Trader A business owner who is the full and only owner of the business
Partnership – The ownership of the business is shared between 2 - 20 people
Limited company – a company which consists of shares purchased by shareholders and has
limited liability so has its own legal identity and the owner’s personal assets are not at risk
Private limited company – A company owned wholly by shareholders who are only those invited to
invest
Public limited company – A company wholly owned by shareholders from which there is no restriction as
to who or how many people may become shareholders
Limited liability – The conditions where an owner’s personal assets are not at risk if the business needs
to close down

Franchise – The business model or arrangement between the franchisor (franchise owner) and
the franchisee (person who takes on a new business)
Franchisee - a business owner that purchases the right to use an existing business's trademarks or
products
Franchisor – the existing business operator who offers the rights of his trademark or products

Try to create definitions for these terms as you progress through the week.
 FORUM – Week 2: Discussion
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Discussion panel – Discussion Brief

If you wanted to start a business you would need to decide a legal structure that is right in
order to start trading as an official, legal business. It is important to choose the most suitable
structure as it will affect the way they can raise money and how decisions are made, including
tax and financial liability if the business runs into trouble. There are several legal structures to
choose from, depending on your situation: sole trader, partnership, private limited or public
limited company.
From Week 1 you saw that entrepreneurs often start a business alone. Many of the famous
brands we know today, such as Apple, Amazon and Virgin, started off from humble beginnings.
This week we help you understand the legal structure a business can choose and the
differences between them.

Emphasis sub-panel

For this week’s activity consider the following questions:

1.Do you think entrepreneurs need to have a legal structure?
2.What do you think are some of the issues an entrepreneur considers when they decide what
type of legal structure to choose?

Read the following article and answer the question below

How do I choose a legal structure for my business? | Informi

3.Give 2 reasons why choosing a legal structure is important

Please remember to use full sentences throughout.

End of sub-panel

Discussion panel – Share and Discuss

Share your answers in the forum. Then comment on two other posts, further developing their
responses. Please remember to be respectful, especially when someone else has a different
point of view.

FOOTER
Icon: clock, Indicative activity timing 30 mins
Icon: tick, Learning Objectives...LO 1
 PAGE – Week 2: Lecture
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Reading panel – Reading

A sentence or two introducing the reading. This week’s reading covers the different types of
legal structure that a business can choose in the UK
Sub-panel (no icon, no title)
E-textbook reference in Harvard style, including the pages to read. Hall et al P.130 – 133
END of sub-panel
Note: You may wish to take notes on the key information as you read.

Webinar-lecture panel – Legal Structures

Last week we looked at entrepreneurship. In this week’s live lecture with your tutor and peers,
we discuss the five different types of legal structures a UK business can choose.

Emphasis sub-panel – General Information

Please remember:

· Do the background reading on the topic, as instructed by your tutor.

· Write down questions you wish to discuss in the webinar.
· Ask a tutor for clarification, either in the lecture or afterwards.
· Listen carefully to the lecture in order to make notes on key ideas.
END of sub-panel
Produce sub-panel – Note-Taking Tips

 Make rough notes while listening and then create better ones when you have more
time.
 Take notes in different colours for separate ideas.
 Highlight anything important.
END of sub-panel
Emphasis sub-panel – Joining the Live Lecture
Please see the Microsoft Teams calendar for information on the date and time of the live
lecture.
To join, go to Teams at the allotted start time, where all live lecture recordings will also be
available for viewing.
END of sub-panel
 PAGE – Week 2: Recap Quiz
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Quiz panel – Quiz

Now is your chance to check your understanding of the lectures by completing this week’s quiz.
Use your notes to help answer the quiz questions.
You can retake the full quiz as many times as you want.
The topics being tested this week are:
 Key terms of legal structures
 Key concepts of legal structures

FOOTER
Icon: clock, Indicative activity timing 30 mins
 FORUM – Week 2: Challenge Activity
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id=176018&forceview=1

Reading panel - Challenge Brief

This week’s Challenge Activity requires you to research interesting industries and make a
presentation about one you found particularly interesting. For this activity you are going to
work in pairs.

Emphasis sub-panel
Interesting Industries to Watch
Task
In pairs, with a partner who does not share the same mother tongue (first language) as you,
research an industry you find interesting. Please ask your tutor to approve the industry you
have chosen (we only want one team per industry).
Examples of possible industries to research: airline industry, shampoo industry, hotel industry,
smartphone industry, gold industry, diamond industry, footwear industry, credit card industry,
or the supermarket industry.
Please choose something interesting and different. Collect the following information about the
industry and prepare a presentation with your team member. Spend about 20 minutes
considering these questions and put your answers into a PowerPoint presentation.
1. Name of the industry and where (in which market?)
2. Who are the major players in this industry? Introduce the main two or three companies
or however many are relevant. Tell us what these companies offer and how they are
different from each other.
3. Of the companies you identified in Q.2 what legal structure do you think they have?
4. What are the advantages of this legal structure?
5. What are the disadvantages of this legal structure?
6. Do you agree with the business' choice of legal structure?
End of sub-panel

Discussion panel – Share

Please upload your presentation (in PDF format) to the forum. Then review two other
presentations from your peers and provide some feedback. Do you think the information
provided is complete? Was there anything you could add?

FOOTER
Icon: clock, Indicative activity timing 60 mins
Icon: tick, Learning Objectives...LO 1, LO2

Practise panel – Extra Practice

Needing a challenge?
Try these extra tasks. /Read the following from the core text book by Hall et al. P.145 -6
 PAGE – Week 2: Summary
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Summary panel – Summary

This week we looked at the different types of legal structure a business can have. A business
will choose the particular legal structure that is most suitable and will weigh up its advantages
and disadvantages. We also looked at franchises. This is a summary of advantages and
disadvantages of the 4 types of ownership plus some notes of franchises.

Advantages
Sole Trader Keeps all profits.
Total control.
Easy to set up (time and
money).
Partnership Easier to raise capital.
Easy to set up (time and
money).
More input in decision
making.
Share losses.
Franchise Less risk with existing
branding and customers.
Private Limited Company Can raise capital from share
issue.
Flexible and more control
than a plc.
Limited liability.
Public Limited Company Can raise a lot of capital on
the stock market.
Limited liability.
Disadvantages
Bears all losses.
Not easy to access finance.
Unlimited liability.
Share profits.
Unlimited liability.
No freedom in decision
making.
Often big initial capital
needed.
Limited amount of capital
from family and friends.
Share all profits.
Less control and may lose
control to hostile takeover.

Glossary panel – Key Vocabulary Self-Assessment

By now, you should be able to define:
[Term]: [definition]. Sole Trader A business owner who is the full and only owner of the business
Partnership – The ownership of the business is shared between 2 - 20 people
Limited company – a company which consists of shares purchased by shareholders and has
limited liability so has its own legal identity and the owner’s personal assets are not at risk
Private limited company – A company owned wholly by shareholders who are only those invited to
invest
Public limited company – A company wholly owned by shareholders from which there is no restriction as
to who or how many people may become shareholders
Limited liability – The conditions where an owner’s personal assets are not at risk if the business needs
to close down

Franchise – The business model or arrangement between the franchisor (franchise owner) and
the franchisee (person who takes on a new business)
Franchisee - a business owner that purchases the right to use an existing business's trademarks or
products
Franchisor – the existing business operator who offers the rights of his trademark or products

 [Term]: [To check your understanding, write up to three sentences for each of these key
terms in context or with an example we have not discussed in the lecture or webinar.
Consider how effectively you completed this task across the week. If you are still struggling with
this terminology, you may wish to you may wish to refer back to this lesson’s materials.

Reflection panel – Reflect on Your Learning

You now need to reflect upon your learning.

 What was the most challenging, interesting, surprising, exciting thing you learned this
week?
 Which approach are you going to take to overcome the challenges for this week?

As a reminder, the learning objectives this week were:

1. Define a sole trader, partnership, private limited company and public limited company.
2. Explain the advantages and disadvantages of all 4 legal structures for businesses: sole
trader, partnerships, private limited companies and public limited companies.
3. Define a franchise, franchisee, franchisor.
4. Explain the advantages and disadvantages of being a franchisee and a franchisor.

If this week proved particularly challenging for you, you may wish to view the following:
– Additional Reading
If you would like to find out more about this week´s topic, try the following

[List of reading(s) relating to current topic]

Next topic we discuss legal structures, part 2

To prepare you for the next topic, you may wish to read: Hall et al, P.137 -140

Quiz panel – Summative Assessment Information

If this week proved particularly challenging for you, you may wish to view the following:

Finding the Right Business Structure - YouTube

Types of Business Ownership Explained | Sole Traders, Partnerships, LTD, PLC and Franchise - YouTube

Different Forms of Business (Introduction) - YouTube

Choosing a Legal Structure for a New Business | tutor2u

If you have any questions about this week’s content, please bring them to the webinar. If you
are still struggling, contact your tutor for additional support.

Reading panel – Additional Reading

If you would like to find out more about this week´s topic, try the following quizzes
https://www.tutor2u.net/business/blog/revision-quiz-legal-structure-basics
https://www.tutor2u.net/business/blog/buss1-revision-quiz-choosing-a-legal-structure

[List of reading(s) relating to current topic]

Next topic we discuss legal structures, part 2.

To prepare you for the next topic, you may wish to read: Hall et al. P.137 -140
[List of reading(s) in preparation for the following full week of learning]

Quiz panel – Summative Assessment Information

The characteristics of company legal structures in the UK and their advantages and
disadvantages are very important and relate to both your summative assessment and exam

Summary panel – References

[List of all references included in the week, in Harvard style (see CEG style guide) and
alphabetical order]
 FORUM – Week 2: Webinar
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Webinar-lecture panel - Webinar
In the webinar, we go over what we covered this week.
You will have the opportunity to ask questions, share your thoughts and receive feedback from
your tutor and your peers.

Emphasis sub-panel – Joining the Webinar

Please see the Microsoft Teams calendar for information on the date and time of the webinar.
To join, go to Teams at the allotted start time, where all webinar recordings will also be
available for viewing.
END of sub-panel

Emphasis sub-panel – Communicating with Others during Webinars

Please remember to be respectful, particularly of the different opinions represented in the
debates and discussions. This helps us all to have a positive learning experience.

· Listen carefully to others, be patient and try not to interrupt.

· Avoid using strong language.
· Be careful with humour and sarcasm – make sure your tone is clear to avoid accidentally
causing offence.
· Be forgiving and understanding of others if they struggle.
END of sub-panel

Discussion panel - Open Forum

You can use the forum on this page to submit questions and share anything interesting prior to
the webinar.
END