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Types of Businesses: The Business Framework


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Sole Trader
The owner of a sole proprietorship business.
Unlimited liability
A legal obligation on the owners of a business of all debts, even if that means the sale of personal assets
Deed of partnership
The legal contract between partners which specifies who owns the business, how profits will be divided, responsibilities etc.
Sleeping partner
A partner who is prepared to put money into a business and owns part of the business but takes not day-to-day interest in decision-making.
Partnership
A business organisation which has between 2 and 20 owners, all of whom have unlimited liability
Partners
The owners of a partnership
Articles of association
The legal document needed to set up a company e.g. a Private Limited Company
Company
A business which has limited liability and is incorporated under the Companies Act
Limited Liability
When shareholders of a company are liable for the debts of a company only up the value of their shareholding (the money they have put in(
Managers
The people responsible for the day to day running of a company. They are answerable to the directors of the company. Some managers are also directors - they are called executive directors.
Directors
People elected to the board of a company by the shareholders to represent the shareholders interests.
Shareholders
The owners of a company
Public limited company
A company whose shares are traded on the stock exchange
Private limited company
A company whose shares are not sold on the stock exchange; owners might be family, friends etc.
Consumer Co-operative
A business organisation owned by customer shareholders and which aims to maximise benefits for its customers e.g. the co-op supermarkets.
Worker Co-operative
A business owned by its workers e.g. John Lewis
Franchise
The right given by one business to another to sell their goods, use their brand image etc.
Franchisee
A business which sells branded products for a franchisor
Franchisor
A producer of a product and developer of a brand who allows franchisees to sell their product in return for a fixed sum or royalty payment.
Multinational company
A business which operates in at least two countries either selling or producing products
Divorce of ownership and control
A characteristic of PLCs where the owners are not the same as the managers of the company
Flotation
The process of initially selling shares in a Plc on the stock exchange. It can raise a large sum of capital but also means the firm is now owned by the shareholders