Other Forms of Business Organisation (Edexcel IGCSE Business): Revision Note
Franchises
Franchising is a business format in which an individual (franchisee) buys the rights to operate a business model, use its branding and software tools and receive support from a larger company (franchisor). The franchisee will pay both an initial lump sum plus ongoing royalty fees
The franchisee is usually the owner of a private limited company
The business is operated under the franchisor's established system and training, marketing support and ongoing assistance are provided
Examples of well-known franchises include Domino's Pizza, KFC and Burger King
Diagram with Logos of fast food Franchises

Some of the many well-known brands sold as franchise opportunities
A franchise is not a form of business ownership; it is an alternative to starting a brand new business from scratch
In most cases, franchisors require businesses to operate as private limited companies as this form of ownership is considered to be more stable than sole traders or partnerships
The Advantages & Disadvantages of Owning a Franchise
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Social Enterprises
A social enterprise is a business that has the primary purpose of creating social or environmental impacts, in addition to generating profits
Social enterprises can take different forms
Cooperatives have a social mission. They are owned and controlled by workers or customers and their members have the right to elect directors and share profits
Charities raise money, provide help and raise awareness of social, ethical, environmental or developmental issues
Different Objectives of Social Enterprises
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Butterfly Books is a social enterprise that publishes children’s educational books in the UK
Their aim is to 'work to educate, inspire and entertain children, aiming to change future generations by reducing gender bias in job roles'
A recent book entitled 'My Mummy is an Engineer' challenges gender stereotypes
Advantages & Disadvantages of Social Enterprises
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Multinationals
A multinational company (MNC) is a business that is registered in one country but has manufacturing operations/outlets in different countries
E.g. Starbucks headquarters are in Washington, USA but they have 32,000 stores in 80 countries
Factors such as globalisation and deregulation have contributed to the growth of MNC’s
MNC’s choose locations based on factors such as cost advantages and access to markets
E.g. Nike originates from the USA but 50% of their manufacturing takes place in China, Vietnam and Indonesia due to the lower production costs in these countries
Examiner Tips and Tricks
Explain questions are worth three marks and require a clear point with a two-step development.
A good way to structure answers to these questions is X (the point) leads to Y and results in Z.
Explain questions do not need you to use a business context.
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