Franchise - a business with a well-known brand name(the Franchiser) lets a person (the Franchisee) or a group of people set up their own business using that brand for free. An example of this is McDonalds.

Advantages for the Franchiser:

• Firm doesn't have to spend large amounts of money in order to expand
• The products necessary for the franchise to operate are under the franchiser;’s direct control
• If applicants are picked well then they can generate a continuous stream of revenue.

Disadvantages for the Franchiser:

• Control issues where the Franchisee doesn't agree with how the franchiser wants them to run their business
• Bad Franchisees can tarnish the reputation of a brand
• Franchisee might not be able to do as well as the original location

Advantages for the Franchisee:

• Greater chance of success as they are using an existing brand name
• Specialist advice and training by the franchiser
• Franchisor provides marketing support
• May be easier to obtain a loan from a bank

Disadvantages for the Franchisee

• Supplies have to be bought from the franchiser, can lead to them paying higher prices
• Continuous royalty payments take away from profit
• Franchisee has less control than a normal business owner would
• A franchise is for a fixed period of time not automatically renewed
• Business cannot be sold without the Franchisers permission

Co-operative - a business that is owned and run by its members (employees and customers). Profits are shared between members rather than being distributed to shareholders.

Advantages:

• Establishing is legally straightforward and cheap to do
• Employees more motivated as they are all working towards a common goal
• Liability for members is usually limited
• Higher quality of service as customers can be also be a part of the business

Disadvantages:

• Employees may want more profits causing conflicts
• Slower decision making as everyone has to be involved
• Capital can be limited as everyone is taking profits out potentially leaving little to reinvest
• Investors may be put off as it is not a traditional business type