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Business Studies IGCSEPDF 40
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● A franchise is an agreement of a business based upon an existing
brand/business. The franchisee buys the license to operate this business from the
franchiser. It is a form of a private incorporated business.
● A joint venture is where two or more businesses start a new business together,
sharing capital, risks and profits. It is a form of a private incorporated business.
● A public corporation is a business in the public sector owned and controlled by
the government.
● Limited liability means that the liability of shareholders in a company is limited
only to the amount they invested. It is only applicable in incorporated businesses
with separate legal identity.
● Unlimited liability means that the owners of a business can be held responsible
for the debts of the business they own. Their liability is not limited to the
investment they made in the business. It occurs in unincorporated businesses
which lack a separate legal identity.
● An unincorporated business is a form of business which lacks separate legal
identity.
● An incorporated business is a form of business with a separate legal status from
their owners.
● Shareholders are owners of a limited company. They buy shares which represent
part-ownership of the company.
● Dividends are payments made to the shareholders from the profits (after tax) of a
company. They are the return to shareholders for investing in the company.
Advantages and Disadvantages of Being a Sole Trader
Advantages
Disadvantages
Few legal regulations – easy to
set up
May not be able to raise funds for
expansion
He is his own boss and has
complete control
No separate legal identity,
unlimited liability
Flexible working time
May have to work long hours