1. Business ownership Part 2
This presentation covers cooperatives, franchises and public ownership; owner liabilities and factors which influence changes of ownership.
Note for tutors:
If you wish to print out these slides, with notes, it is recommended that, for greater clarity you select the ‘pure black and white’ option on the PowerPoint print dialogue box.

2. Private ownership review
Most private businesses are owned by sole traders, partners or are companies.
Other alternatives are:
Cooperatives – societies which operate for the benefit of their members (whether customers or workers).
Franchises – where a large company allows a small operator to trade on name in return for share of profits.
As revision, students could be asked to differentiate between sole traders, partners and companies at the start of this slide.

3. Cooperatives Benefits Drawbacks Each owner has equal share/one vote
Profits are shared equally
Can have limited liability status
Workers can decide whether to be owners
Obtaining finance may be difficult
Decisions by consensus take time
‘Hard’ decisions may be difficult to make
‘Equality’ can be hard for good leaders/workers
Benefits
Drawbacks
The different types of cooperatives could usefully be mentioned, although the focus is better on worker cooperatives. Ethical objectives and beliefs are not included on the slide as this is not a prerequisite of a cooperative, although it is a feature of many.

4. Franchise Benefits Drawbacks Less risky than starting own business
Selling a known name
Advice and guidance available
Owner keeps most of profit
Share of profit goes to franchisor
Franchisee must abide by legal agreement
Only franchisor products can be sold
Success very dependent on popularity of product
Benefits
Drawbacks
Examples which can be discussed include MacDonalds, Pizza Hut, Body Shop, Prontoprint, Benetton, Wimpy, Kentucky Fried Chicken and BSM. So can the dangers of taking on a franchise with an unknown franchisor!

5. Public ownership
Term used for enterprises owned and controlled by the state.
Aim is to provide services needed by everyone, regardless of income or wealth, eg health and education.
Mainly financed through taxation.
Whereas Government departments are financed mainly through taxation, councils can earn small amounts through sales of services and public corporations raise money in different ways, eg the BBC licence fees.
PPP (Public-private partnership) and PFI (private finance initiative) is not mentioned on the slide, but may be introduced with examples, eg the London Underground or the building of a new school or hospital by a private company.

6. Examples of public ownership
Central government departments, eg Department of Health
Local authorities and councils
Public corporations, eg BBC, Bank of England, British Nuclear Fuels
Privatisation is not mentioned on this slide, but it is useful to explain to students how the last category has been reduced dramatically over the last 20 years. This section has been kept relatively brief in the presentation as it is less likely students will choose a publicly owned enterprise to investigate for their portfolio.
Again, depending on the level of the group you may wish to mention that many government departments and local authorities use private companies to deliver services competitively, such as refuse collection and data collection. Capita is a good example of a private firm contracted to undertake government services, such as screening those who want to work with young people.

7. Owner liabilities 1 All owners must: Produce annual accounts
Pay tax on profits
Operate the business within the law
Abide by specific agreements (eg Partnership or Franchise agreement) or trade/professional regulations relating to their activity
Students may find it easier to think of ‘liabilities’ as ‘responsibilities’. The main areas of law which affect businesses are the Companies Acts, employment law, health and safety law, data protection legislation, consumer law and environmental laws – most of which students will learn about in other chapters. Examples of trade/professional bodies include the Law Society, BMA and associations such as the BFA which oversees franchisors.

8. Owner liabilities 2
Sole traders/partners are personally liable for debts
Shareholders in companies can lose investment if business fails
Company directors can be held personally liable in law in certain circumstances
Franchise operators may have to meet specific sales targets.
Specific owner liabilities can also differ depending upon the type of ownership/type of activities. The main issues are covered above, although a detailed knowledge of director responsibilities/liabilities is beyond the scope of the scheme at this level.

9. Factors which influence changes of ownership
More capital required to finance expansion or extend operations
More skills/abilities required
Greater security/less risk required
Change of business activity
Changes in legal regulations and requirements
Changes in circumstances and ambition are the two major reasons why ownership may change. Students should appreciate that all businesses do not necessarily start off as sole traders and then go through each step at a time! Hopefully the case studies in the book and in the tutor pack will make this clear. The change in legal regulations is apposite given the introduction, for instance, of LLP status for partnerships.