QUESTION 1
Every entrepreneur has certain expectations and goals when choosing a business.
1.1 What is a close corporation in business? Give one examples. (5)
1.2 You are a Grade 7 teacher leading a discussion on the different kinds
of franchising.
1.2.1 What are the issues to consider when di...
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Question 1
1. Every entrepreneur has certain expectations and goals when choosing a business.
1.1. What is a close corporation in business? Give one examples.
A close corporation is a smaller corporation consisting of one to ten members making it easier to
manage than a bigger company. Close corporations are less strict on formalities of governance and
can involve retail, manufacturing or financial services. Example: KFC. (Study Guide - Page 122)
1.2. You are a Grade 7 teacher leading a discussion on the different kinds of franchising.
1.2.1. What are the issues to consider when discussing about capital requirement for a franchise.
Money to commence:
Initial payment made by someone wishing to start a business to the person granting the right to do so.
Covers use of name, trademark, business knowledge, assistance with location, establishment, and
initial training.
Money for establishing:
Funds allocated for building, alterations, improvements, and equipment purchase necessary for
business setup.
Money for management and advertising:
Recurring payment, often a percentage of turnover, for ongoing management and advertising
services. Insufficient allocation may result in subpar services. Some portion used for joint advertising
efforts.
Money for additional services:
Additional funds requested by branch managers for specialized services such as centralized
bookkeeping or professional taxation services.
The capital requirements for one to be able to start a franchise is money without money you cannot
commence to buying a franchise. In order to buy a franchise, you will need to pay the person giving
you the right to owning the franchise which includes the use of the name, trademark and business
knowledge and assistance with a proper location. This money will be used to establish the building
and purchasing of equipment. Money will also need to be allocated for management and advertising,
staff and any additional services. (Study Guide - Page 132)
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