Co-operatives

A co-operative is an organisation formed by people joining together for mutual interest to organise production, make decisions, and share profits. All members have an equal say in running the business and share equally in the profits. There are many different types of co-operative but two main types can be distinguished:

· Producer (or worker) co-operatives. These are groups of people who have organized themselves collectively to produce goods or services, as in a farming co-operative. They are able to pool their resources to buy expensive equipment and share equally in decision-making and any business profits.

· Retail co-operatives. The first retail co-operative society was formed in 1844 when a group of workers who were dissatisfied with low pay and high food prices joined together to buy food from wholesalers and take advantage of bulk discounts. The principles of modern retail co-operatives are much the same:

§ The co-operative is owned by its members

§ Any person can become a member by buying a share (for as little as £1 in the UK)

§ Members elect a board of directors to run the co-operative

§ Each member is allowed one vote regardless of the number of shares he or she holds

§ Profits are shared between members and customers

Today many of the smaller retail co-operative shops have been forced out of business by large supermarkets. In order to compete, a number of co-operatives have formed into larger superstores selling a wide variety of goods and services, normally located on large out-of-town sites. The co-operative movement has also successfully expanded into other activities, such as banking, insurance, travel agents, funeral direction, and bakeries.

Franchises

This form of business ownership was first introduced in the USA but is now fast growing in popularity in other countries. A franchise is an agreement between two parties:

· The franchiser – an existing, usually well known company with an established market for its product

· The franchisee – a person, or group of people, who buy the right to use the trading name of the franchiser and either manufacture, service, or sell its product in a particular location.

Well-known examples of franchise operations include McDonalds, Sock Shop, Wimpy, Prontoprint, and BSM. It is also increasingly common for smaller organisations to franchise parts of their operations. For example, milkmen sometimes franchise their round from the local dairy. Department stores will also franchise space within their stores to other retailers.

To buy a franchise in the UK, a business can pay around £15,000 – 20,000, plus a percentage of the turnover known as royalty. In return, the established company will often provide training, equipment, materials, marketing, and help finding premises. The advantage to the franchiser is an increase in the market for their product without the need to expand the firm.

Advantages of buying a franchise:	Disadvantages of buying a franchise:
· Product name and market likely to be well established · Franchiser will often market and promote the product · Banks may be more willing to lend money to a well known franchise · Risk of business failure is low	· Cost of buying franchise could be high · A proportion of business profits is paid to the franchiser · Franchise agreement can be withdrawn · Role of business owners reduced to ‘branch manager’ · Most aspects of business will be dictated by franchiser

Дата добавления: 2015-12-08