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Employer-employee relations.

17. Public and private limited companies: differences, advantages and disadvantages

18. Other forms of ownership: mutuals, NPOs, charities.


Some companies, like certain life insurance companies, are mutuals. When you buy insurance with the company you become a member. Profits are theoretically owned by the members, so there are no shareholders.

In Britain, another kind of mutual is building societies, which lend money to people who want to buy a house. But a lot of building societies have demutualized: they have become public limited companies with shareholders. This process is demutualization.

Non–Profit Organizations

Organizations with 'social' aims such as helping those who are sick or poor, or encouraging artistic activity, are non–profit organizations (BrE) or not–for–profit organizations (AmE). They are also called charities, and form the voluntary sector, as they rely heavily on volunteers (unpaid workers). They are usually managed by paid professionals, and they put a lot of effort into fund–raising, getting people to donate money to the organization in the form of donations.




- Some people are happier working on their own, while others like to belong to some kind of organization.

A franchise is a contractual agreement in which one party (the franchiser) sells the right to market goods or services under its name to another party (the franchisee). McDonald's is an example of retail franchise.

The franchisee is usually given exclusive selling rights in a particular area.


1) franchises are the perfect way to learn about a new business;

2) real entrepreneurs can make poor franchisees;

3) franchises require less work than other businesses;

4) franchises are good for older people;

5) previous experience is essential.

Disadvantages from a Franchisor’s point of view:

  1. Considerable capital allocation is required to build the franchise infrastructure and pilot operation. At the beginning of the franchise program, the franchisor is required to have the appropriate resources to recruit, train, and support franchisees.
  1. At the beginning of the franchise program there is a broader risk that the trade name can be spoiled by misfits until such time the franchisor is capable of selecting the right candidate for the business.
  1. There is a risk that franchisees exercise undue pressure over the franchisor in order to implement new policies and procedures.
  1. The franchisor has to disclose confidential information to franchisees and this may constitute a risk to the business.

Disadvantages from a Franchisee’s pint of view:

  1. The requirement to pay the franchise fees and royalty to the franchisor, which in some cases can be exaggerated.
  1. The transfer of all goodwill built in the local market to the franchisor upon expiration or termination of the franchise contract.
  1. The necessity of abiding by the franchisor’s operating systems, standards, policies and procedures.

Reduced corporate profit margin due to payment of royalties and levies.

Date: 2016-01-05; view: 1348

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