Partnership and a franchise company
In my assignment I am going to research two contracting businesses and what different types of ownership there are within the companies. The two businesses that I have chosen for my investigation are Shell Ltd and Prestige Limousines, I will be comparing the differences between a partnership and a franchise company. I am also going to discuss what liabilities the companies have and how that particular type of ownership is suited to the business. The Shell Ltd company branch (garage) that I am investigating is a franchise company, this is based in the city centre near five ways roundabout on bath row road and which is a worldwide company.
It is a retail business, which provides the service of fuel and shop products. It provides customers with three different types of fuel which are, diesel, unleaded and optimax. These are different types of fuels service provided by Shell. Also Shell provides products and other motor vehicles services such as quality engine oils, screen-wash which is used to clean the front windscreen glass on the vehicle and etc. Shell has up to approximately 1,000 branches through-out the UK and 40,000 branches worldwide.
A franchise company is owned by shareholders and run by directors. A franchise company is different from a sole trader and partnership in that it has legal identity separate from its owners. The shareholders are not liable for the company debts, they regulated by the Acts 1985 and 1987. Businesses such as Shell are run by a franchisee who has been given permission to operate the business by a franchisor, the organisation which owns and controls the product and services being sold. The franchisee gets the benefit of the franchisor’s expertise in marketing and operations.
The franchisor at Shell will often supply fuel and stock for sale, provide shop displays and give help and advice to the franchisee, which operates in a particular branch of Shell. The franchisee has the responsibilities of running the business on a day to day basis and keeps the stock sales profit and commission on fuel from the directors of the franchise company. In addition, the franchisee also needs to pay the franchisor certain amount of profit for the use of the trade name. Some franchises carry more risk then others, meaning that some franchises are less likely to be successful.
Businesses such as Shell have a successful and famous name for their standards and therefore companies such as Shell carry fewer risks. Being a franchise company suits Shell because it is a well known and successful petrol station and because it takes one person to run minimum six petrol stations sites that is what is required from Shell and this will eventually get fewer people to run a couple of sites and will allow Shell to increase its branches. Each particular site is being run successfully then it will allow Shell reputation and value of the company increase. The other chosen business is Prestige Limousines.
The type of business ownership is a partnership. This is based in Sparkhill, Birmingham and is run by the family as a family business. This business has two partners. This business involves hiring out limousines and other luxury cars. Once a customer has booked out a limousine or any cars for a particular occasion and has agreed on a fixed package then on the date it is booked for it is driven by the limousines driver and is located where it is supposed to be. The benefits of having a partnership is if there is one owner he has too much pressure to run the business.
Since it has two partners there is less pressure on one person and this way two people can share all their ideas. If one is off sick, the other could cover it. If the business becomes bust the partners have unlimited liability for any debts, and are therefore personally liable. The liability Prestige Limousines may face is changes with a partnership ownership which will affect rights and liabilities and the amount of capital may change and so might the share of profit. Changes in a partnership may happen when a partner retires or dies, or if a new partner joins.
Also another way that a partnership business could be affected by when a partner decides to retire. For Prestige Limousines this could have a big affect because it is only a two people partnership, and if one was to retire it will lead to many problems such as it would either become a sole trader ownership or it will take time for the remaining partner to find another partner for the business. Also the same problems may occur if one partner dies. One other affect on business could be one of the partners become bankrupt. P2-M1
There are several different types of business ownership, the owners have different responsibilities and involvement in a business. One aspect of this is who bears the business risk and whether the owners have limited liability. Different types of ownership are, Sole trader Partnership Company Public ownership Co-operative Franchise. Normally when a business starts such as Prestige Limousines , the business is small. This is because the person who starts it hasn’t got a lot of finance.
A person who starts alone in the business world is called a sole trader. If there are two or more persons involved , e. g. family or friends, then it is called a partnership. These two types of businesses are unlimited liability, because it’s not the business that is liable but the owner. This means that, if the business goes bankrupt, the owner’s personal assets can be taken away. For this reason being and from consideration I see that if one partner at Prestige Limousines becomes bankrupt the second partner is there to help if it was a sole trader his personal belonging (valuables) could be taken away therefore I think a partnership business in Prestige Limousines is best suited for it purpose.
Shell is also suited in its ownership, if it was to be any other type of ownership then it would not be successful, because it has more then 40,000 branches worldwide it would be very difficult for it not to be a franchise company because the company name then wouldn’t be recognisable for consumers if there was to keep a different company name for each branch.
Shell has one supplier which supplies them their good and services therefore they would have any problems of finding a particular supplier. The tertiary sector, whose services are sold in consumer, capital, industrial and service markets, forms a major part of most developed economies (such as the UK Italy and France). In recent decades the tertiary sector has increased in importance for many developed economies.
In the UK the tertiary sector is by far the biggest proportion of the economy. Operating in the tertiary sector poses similar problems to that of the secondary sector, they still need to “add value” to their products and they still face competition. Yet because a good deal of service sector business requires “face to face” contact with the customer, it is a little harder for overseas competition to take customers away.