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Nocha Ltd makes and sells ice cream. In the 1950s, Nick Nocha remained a sole trader instead of forming a partnership with his family. To what extent was this a good business decision?

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Introduction

Past Paper Questions Page 62 1. Nocha Ltd makes and sells ice cream. In the 1950s, Nick Nocha remained a sole trader instead of forming a partnership with his family. To what extent was this a good business decision? (7) As a sole trader, it is cheap to set up as not much capital is required. And it is easy to set up a business as there is no complicated paperwork or solicitors needed. As only Nick owns the business, he is his own boss. So he doesn't have to take orders from anyone and business decisions are made by him. Another advantage is that business affairs can be kept private and all profits go to Nick Nocha. ...read more.

Middle

Where as in partnership, the partners can specialize in what they do best. In partnership, as there are more people, there is more capital and more ideas which help expand the business. 2. When they opened a new factory in 1970, the business became a private limited company. What business reasons might Nick Nocha have had for this change? (6) Nick Nocha might have chosen to set up a private limited company as it is easy and inexpensive to set up. In private limited company, the owners who are the invited shareholders have limited liability. So, if the business fails, then they only loose what they put into the business and nothing more. Whoever, as a sole trader, Nick Nocha would have had unlimited liability, so it is possible for him to loose everything he owns. ...read more.

Conclusion

Assess the benefits to Nocha Ltd of selling these franchises. (7) The advantages of making Nocha Ltd into a franchise are that he can expand his business without the need for large amounts of capital. The franchisee, person who buys a franchise, can be motivated to make a success of the business, which will make the whole business more successful. Another reason why Nocha Ltd was changed into a franchise would be that more successful the franchise, the more royalty payments they would receive. The franchiser, which is Nocha, The disadvantages would be that if they had set up their own branch, then they would receive all of the profits. There is also another risk, if the franchisee doesn't maintain the standards such as the quality or exploiting the consumers, then it could damage their trade name and reputation. ...read more.

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