Private Company Vs Franchise

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This business report will consist of a detailed analysis of the features of a private limited company and a franchise. This detailed analysis includes comparing and contrasting between the two business forms, describing real life examples for each, and how the profits or tax rates changes depending on what business form it is. A private limited company is usually small in size and they privately hold business entities. Shares offered by a private limited company cannot be traded on the stock market unlike the public limited companies. For being a shareholder in a private limited company, it is important for you to get asked to do it. According to the law, the shareholders of a private limited company has separate legal identities. Some examples…show more content…
The concept of franchises are expanding your business and distributing products with the help of a license and legal formalities. Franchisees allow the entrepreneur or franchisee to trade in capital for a franchise from the franchisor. This form of business enables an entrepreneur to trade for money from the franchisor for the franchise they are setting up. Franchisees are required to pay a fees to the franchisor in order to sell and buy under the company’s brand name. Some well known examples of a franchise would be fast food outlets like Mc Donald’s or subway. Among franchises, food and service businesses are the most common. Both these forms of businesses are different and therefore have different objectives but their main goal is profit. They fall into the category of the tertiary sector that provides goods and services and make a profit out of it. Common objectives of a private limited company increase the production rate (products) and quality and simultaneously reducing the cost, increasing market shares, and maximize the profits for the…show more content…
These directors and managers receive a salary and they are entitled to pay taxes. Private limited companies, too however, are entitled to follow a set of rules and regulations to form the company and to be registered in the company house, an article of association. Since private limited companies have a limited liability, their owners cannot directly be held responsible for debts or losses.xp The profits are not often used completely by the private limited company, they use it first to pay off taxes. Only after this tax is payed off are they allowed to split it between shareholders. These profits are used for benefits, expenditures or to pay off salaries of the employees. Private limited companies are supposed to pay a variety of taxes, these include income tax and advance tax. On the contrary, profits made by franchisees, are mostly used up by themselves, however a specific percentage of this profit is payed to the franchisor. This percentage depends on the rates of profit and how big the company is. Franchisees are also entitled to something known as the franchise tax. This fee is not based on the profits or income but are fixed amounts the franchisor has to pay to keep the business running in the
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