Franchise Business Case Study

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Research Question: Which form of business ownership is more likely to grow and succeed as a business?
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This essay will discuss various aspects of franchises and private limited companies. For example, how they are formed, their profit distribution, taxation etc. It will also highlight which form of business is more likely to succeed.

The Al Habtoor group is a private limited company and are a LLC. It operates in the secondary sector. Each member has limited liability and will only lose their investment in the business. This business can have a maximum of 50 shareholders and need the agreement of all shareholders to sell their shares.

Subway is a …show more content…

You also get access to market research along with advertising and merchandise assistance. Plus, you get associated with a well known brand and get access to operator manuals and stock control systems. The disadvantages are that the franchise owner does not have control over business decisions and must follow the operator manual, and you are not obliged to renew the franchise agreement at the end of the franchise term and a royalty fee needs to paid to the franchisor for doing business with them. You are allowed to work within your own territory and need to pay a startup fee and do not control the pricing or the business model.

Private Limited Company

The advantages in a ltd company are that you have limited liability and will only lose what you invested. You can raise the company’s capital since it can have up to 50 shareholders. However, growth might be limited to the small amount of shareholders and you need the agreement of other shareholders to sell your shares.

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