Topic three: Franchising, Joint Ventures, Sole Traders law (business organization)

Essay by m0v0mUniversity, Bachelor'sA-, September 2006

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"A sole trader operating under a franchise is said to be the master of all he/she controls".

Discuss this statement with special reference to the advantages and disadvantages of such a business structure in connection with the operation of a franchise.


A sole trading business organisation is the simplest form of business organisation as it only requires one principal.

Sole traders can be found in most types of business undertakings such as, small professional practices, builders, plumbers, delis, etc.

The business organisation is, in effect, the individual who is responsible for setting up, operating and leaving the sole tradership in any manner he or she please.

There is no law relating specifically to sole traders. They are, however, subject to laws connected with fair trading, local authority regulations (if operating out of a residence), tax, etc. The Business Name Act is important and has been dealt with in depth earlier in the Text.


That person is responsible for the entire decision making and is in sole control.

Funding can be difficult (often by way of a mortgage over property) and the sole trader is personally liable for all the debts of the business.

A sole trader is not regarded as a separate legal entity in the eyes of the law. However, in commercial circles the concept of the sole trader is well established and in terms of accounting conventions such business are treated as separate accounting entities as distinct from the proprietors.

The sole trader will have to be aware of numerous pieces of legislation governing tax, trade practices, health and safety, workers' compensation, public liability insurance, industrial law, local authority by-laws, environmental protection, etc. Any liability under such legislation will fall squarely on the shoulders of the sole trader.

There is no continuity of...