Other Forms of Business Organisation (Edexcel IGCSE Business)

• Franchising is a business format in which an individual (franchisee) buys the rights to operate a business model, use its branding and software tools and receive support from a larger company (franchisor).  The franchisee will pay both an initial lump sum plus ongoing royalty fees
   
• The franchisee is usually the owner of a private limited company
  • The business is operated under the franchisor's established system and training, marketing support and ongoing assistance are provided
  • Examples of well-known franchises include Domino's Pizza, KFC and Burger King

Diagram with Logos of fast food Franchises 

Some of the many well-known brands sold as franchise opportunities

• A franchise is not a form of business ownership; it is an alternative to starting a brand new business from scratch
  • In most cases, franchisors require businesses to operate as private limited companies as this form of ownership is considered to be more stable than sole traders or partnerships
    
    

The Advantages & Disadvantages of Owning a Franchise

• A social enterprise is a business that has the primary purpose of creating social or environmental impacts, in addition to generating profits
  
  
• Social enterprises can take different forms
  • Cooperatives have a social mission. They are owned and controlled by workers or customers and their members have the right to elect directors and share profits
  • Charities raise money, provide help and raise awareness of social, ethical, environmental or developmental issues

Different Objectives of Social Enterprises

• Butterfly Books is a social enterprise that publishes children’s educational books in the UK
  
  • Their aim is to 'work to educate, inspire and entertain children, aiming to change future generations by reducing gender bias in job roles'
  • A recent book entitled 'My Mummy is an Engineer' challenges gender stereotypes
     

Advantages & Disadvantages of Social Enterprises

• A multinational company (MNC) is a business that is registered in one country but has manufacturing operations/outlets in different countries
  • E.g. Starbucks headquarters are in Washington, USA but they have 32,000 stores in 80 countries
     
• Factors such as globalisation and deregulation have contributed to the growth of MNC’s
• MNC’s choose locations based on factors such as cost advantages and access to markets 
  • E.g. Nike originates from the USA but 50% of their manufacturing takes place in China, Vietnam and Indonesia due to the lower production costs in these countries