Question 1: Define the term 'sole trader'. What is one advantage and one disadvantage of this type of ownership?

Answer: A sole trader is a business owned and operated by one person. An advantage is that they have full control over decisions; a disadvantage is that they bear all the risks and liabilities themselves.

Question 2: Describe what a partnership is in terms of business ownership. Mention one benefit and one potential problem of partnerships.

Answer: A partnership is when two or more people share ownership and responsibility for a business. A benefit is shared workload and resources; a potential problem is disagreements between partners.

Question 3: Imagine a business owned by a group of investors who share profits and decision-making. What type of ownership is this? Explain why.

Answer: This is a private limited company (Ltd) because it involves shareholders who own parts of the business and share profits.

Question 4: Draw a simple diagram to illustrate the structure of a sole trader business. Label the key parts involved.

Answer: A correct sketch should show a single person at the center with arrows pointing to the business, indicating ownership and decision-making authority. Labels should include 'Owner', 'Business', and 'Customer'.

Question 5: Identify two differences between a partnership and a private limited company.

Answer: A partnership is owned by individuals sharing profits, while a private limited company is owned by shareholders. Partnerships have unlimited liability; Ltd companies have limited liability. Partnerships are easier to set up; Ltd companies are more regulated.

Question 6: Explain why someone might choose to set up a business as a franchise rather than starting their own independent business.

Answer: They might choose a franchise because it offers a proven business model, brand recognition, and support from the franchisor, reducing some risks of starting from scratch.

Question 7: Sketch a simple diagram showing the relationship between a franchisee and a franchisor. Include labels for both parties and the key connection.

Answer: A correct sketch should depict two boxes labeled 'Franchisor' and 'Franchisee' connected with arrows indicating the franchisee receives rights to operate under the franchisor’s brand and system. Labels should include 'Franchisor' and 'Franchisee'.

Question 8: List two advantages and two disadvantages of owning a franchise.

Answer: Advantages: Established brand and support from the franchisor. Disadvantages: High initial costs and less control over business operations.

Question 9: What is meant by the term 'public limited company' (PLC)? Provide one key feature.

Answer: A PLC is a company whose shares can be bought and sold by the public on the stock exchange. A key feature is that it has limited liability and can raise capital from the public.