Type of Advantages
Organisation
Sole Trader • All profits kept by owner
• Owner has complete control over
all decisions
• Owner can choose hours of work
/ holidays
• More personal service offered
to customers
• Very easy to set up
Partnership • Partners can bring in different
areas of expertise
• More finance available
• Workload can be shared
• Partners in a stronger position
than a sole trader to raise
finance from lenders
Disadvantages
• Owner has limited liability
• Available finance is restricted
• Owner has no one to share decisions
/ problems with
• Owner has no one to share workload
with
• Work may stop if owner is ill / on
holiday
• Partners have limited liability
• Profits have to be shared between
partners
• Partners may disagree
• If one partner dies or leaves, a new
Partnership Agreement needs to be
set up
Private Limited • Shareholders have limited
Company (Ltd) liability
• Control of company is not lost to
outsiders
• More finance can be raised from
shareholders and lenders
• Significant expertise from
shareholders and directors
Public Limited • Huge amounts of finance can be
Company (PLC) raised
• Plcs often dominate the markets
• Easy to borrow from lenders due
to their large size
• Profits shared amongst more people
• There is, as with a Partnership, a
legal process in setting up the
company
• Shares cannot be sold to the public.
Therefore raising finance is more
difficult than for a public limited
company
• Firm has to abide by the
requirements of the Companies Act
• Annual accounts are available for
anyone who requests a copy.
• Set up costs of company may be
high (e.g. they may have to produce
top quality, detailed prospectuses
and arrange underwriting)
• Must abide by the Companies Act.
• No control over who buys shares
• Must publish annual accounts
Franchise Franchiser
• Allows the franchiser to increase
its market share without investing
heavily
• Provides a reliable revenue (the
franchiser will receive a
percentage of the turnover or a
set royalty payment each year)
• Risk and uncertainty are shared
between the franchiser and
franchisee
Franchisee
• Franchise may advertise nationally,
therefore little advertising needs
to be done by the franchisee
• Risk of business failure is reduced
as the business already has an
established trading record and
Franchiser
• Franchiser only receives a share of
the profits
• Profits depend on the ability of the
franchisees
• Reputation of the whole franchise is
dependent on individual franchisees
Franchisee
• Products, selling prices and store
layout may be dictated, stifling
franchisee initiative
• A royalty payment or percentage of
revenue has to be paid to franchiser
• The franchiser might now renew the
 presence in the market franchise after a certain time
• Franchiser may carry out training • Can be costly to purchase a successful
and administration franchise