The private sector

In the private sector, most businesses are sole traders, partnerships or limited companies (see Sole traders and partnerships and Limited companies). Other types of ownership include franchises and co-operatives.

Franchises

A franchise fast food restaurant

Big companies make agreements for private individuals to buy the right to sell their goods, for example fast-food outlets like Burger King. The franchisee runs a private business, buying products from the company franchisor that is given a percentage of the profits. In return, the franchisee can use the company's logo and have the shop fitted out in the company style. The franchisee benefits from specialist training and the company's own national advertising. The franchisor can expand without financial risks.

Co-operatives

There are two main types:

Worker co-operatives

Printing businesses are often run as co-operatives

Sometimes groups of workers buy out their company if it is in financial difficulties. By co-operating with each other, they can share expertise, buy more expensive equipment, and gain economies of scaleeconomies of scale: Economy of scale means that big companies can produce things cheaper than smaller companies. There are two reasons for this. First, they can buy in bulk, so can negotiate with suppliers to pay less. Second, the more a company produces the lower the average cost per product will be of overheads (fixed costs, such as buildings). Where similar companies locate together as an industry they can also experience economies of scale. They share the costs of building the necessary infrastructure (eg roads, telecommunications) and the cost of educating the workforce, between them. Also the combined demand from all these companies should mean that supplies are cheaper.. The members of the co-operative invest their own capital, and share the profits. The management of the firm is usually run on democratic lines. Examples of businesses run as worker co-operatives include printing, engineering and textile enterprises.

Retail co-operatives

The Co-operative Retail Societies (the Co-op) is the most familiar high street outlet of this type. It has wider aims than most other business organisations, for example, sponsoring Labour MPs, since it has political and social, as well as financial, objectives. Anyone can join, by buying shares for £1.00, but these cannot be bought or sold on the Stock Market. All members share the profits and have an equal vote to elect the management.