What Form Of Business Configuration ( Franchise Or Limited Liability Company?

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Research question: What form of business configuration (Franchise or Limited Liability Company - LLC) is more effective, and which type will be more successful in this situation? Executive Summary There are several different aspects of Franchises and LLCs discussed including: how Franchises and Private Limited Companies are formed, taxation, profit distribution etc. I have assessed which form of business is more likely to be successful. I have also addressed the three sectors of production; Primary, Secondary and Tertiary. My analysis has led me to the conclusion that the two business models each have pros and cons and that the specific circumstances will determine which is most suitable. Issue I have chosen to examine, in detail, a…show more content…
Subway operates in the Tertiary sector. A Franchisee has the right, granted by the Franchisor, to offer the Franchisor’s products or services under guidelines provided by the Franchisor, at a certain location for a concrete period of time. In a franchise, the Franchisor sells the rights to sell its proprietary good/service to third parties or Franchisees. Both of the parties then sign a franchise agreement, which lasts for any agreed period, but generally between, 5 and 30 years. Once the franchise commences to function the Franchisee pays a royalty payment has to the franchisor on a monthly, quarterly or annually basis. The franchisor does not have liability and is not responsible for any activity in the franchisees business and does not have any employment liability, and are not responsible for any of the on job injuries in the franchisees business. The Al Habtoor Group is a private Limited company and is a Limited liability company, it engages in the secondary sector. All of the members have Limited liability and can only loose their investment in the business. This business can have a maximum of 50 shareholders, and it requires the acquiescent of all shareholders to sell their shares. The business set up To set up a Limited Liability company you must register with Companies house, also known as “Incorporation”. To set up a Limited Liability company you need a company name (there are many rules of what the company name can and can’t include). It is also a
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