1.2.5

Not For Profit & Franchises

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Not-For-Profit Organisations

Any profit made by not-for-profit organisations is reinvested (put back) in the business. Any profit cannot be kept by the owners. There are lots of types of not-for-profit organisations and they can have different aims:

Charities

Charities

  • Charities, like Oxfam or Save the Children, are a type of not-for-profit organisation.
  • Getting charitable status lets a business get tax relief and lets it apply for certain grants. For a business to get charitable status, they must follow rules and regulations.
Social enterprise

Social enterprise

  • Social enterprises, like the Big Issue or TOMs are another form of not-for-profit organisation.
  • They are more similar to for-profit businesses in that they make a surplus through selling goods or services. This profit is reinvested to support the social enterprise’s aim.
Unincorporated association

Unincorporated association

  • Not-for-profit organisations can choose to be an ‘unincorporated association’ but, like sole traders and partnerships, the people who manage it have unlimited liability.
  • This means that they get no profit and they are legally responsible for all of the organisation’s debt.
  • Bigger organisations, like Oxfam, tend to be incorporated so that the people running it are protected from limited liability.

Franchising

Franchising is where a company gives someone the right to sell its products and use its trademarks. The ‘franchisee’ usually pays the business an upfront fee and a percentage of the profits.

KFC

KFC

  • Kentucky Fried Chicken (KFC), which is part of the TacoBell Group is an example of this.
  • Many KFC’s all over the world are not owned by KFC but instead owned by individuals who pay a fee and percentage of the profits to KFC. This lets them use the KFC brand name and the “original recipe”.
Advantages of franchising

Advantages of franchising

  • The business can expand without needing large amounts of investment. The firm does not incur the costs involved with opening new stores.
  • The business also does not have to be concerned about some of the risks of becoming a larger corporation, for example, diseconomies of scale (which may be caused by the growth from opening and operating new stores themselves).
  • Franchising increases brand awareness of the firm’s products or services.
Disadvantages of franchising

Disadvantages of franchising

  • A disadvantage of franchising is that the franchiser does not have complete control over how they operate.
  • If a franchise is run badly, then a single franchise or store can negatively affect the brand image.
Jump to other topics
1

Business Activity & Influences on Business

1.1

Business Objectives

1.1.1Business Aims1.1.2Business Objectives1.1.3Business Objectives Change Over Time1.1.4End of Topic Test - Business Aims1.1.5Diagnostic Misconceptions - Profit
1.2

Types of Organisations

1.2.1Sole Traders & Partnerships1.2.2Limited Companies1.2.3Limited Liability1.2.4Unlimited vs Limited Liability1.2.5Not For Profit & Franchises1.2.6Multinational Companies1.2.7End of Topic Test - Business Ownership1.2.8Application Questions - Business Ownership1.2.9Diagnostic Misconceptions - Company vs Business1.2.10Diagnostic Misconceptions - Owners vs Shareholders
1.3

Classification of Businesses

1.3.1Sectors
1.4

Decisions on Location

1.4.1Location
1.5

Business & the International Economy

1.5.1Globalisation1.5.2Exchange Rates
1.6

Government Objectives & Policy

1.6.1Government Objectives1.6.2The Government & Business Activity1.6.3Interest Rates1.6.4Interest Rates - Calculations1.6.5Diagnostic Misconceptions - Recessions
1.7

External Factors

1.7.1External Factors
1.8

What Makes a Business Successful?

1.8.1Measuring Success1.8.2Reasons for Failure
2

People in Business

2.1

Internal & External Communication

2.1.1Communication
2.2

Recruitment & Selection Process

2.2.1Types of Employment2.2.2Recruitment Stages2.2.3Effective Recruitment2.2.4Legal Controls Over Employment2.2.5Diagnostic Misconceptions - Internal Recruitment
2.3

Training

2.3.1Training
2.4

Motivation & Rewards

2.4.1Motivation in the Workplace2.4.2Financial & Non-Financial Methods2.4.3End of Topic Test - The Workforce2.4.4Application Questions - The Workforce2.4.5Diagnostic Misconceptions - Money
2.5

Organisation Structures

2.5.1Organisational Structures2.5.2Centralised vs. Decentralised Structures2.5.3Tall & Flat Organisations2.5.4Functional Areas Within a Business2.5.5End of Topic Test - Org Structure
3

Business Finance

3.1

Sources of Finance

3.1.1Internal & External Sources of Finance3.1.2Factors Affecting Sources of Finance
3.2

Cash Flow Forecasting

3.2.1Cash Flow3.2.2Consequences of Cash Flow Problems3.2.3Cash Flow - Calculations3.2.4Solutions to Cash Flow Problems3.2.5Diagnostic Misconceptions - Cash Flow
3.3

Cost & Break-Even Analysis

3.3.1Costs, Revenue & Profit3.3.2Profit, Average Unit Cost & Interest3.3.3Costs - Calculations3.3.4Revenue - Calculations3.3.5Break-Even Analysis3.3.6Profit & Losses - Calculations3.3.7End of Topic Test - Finance3.3.8Grade 9 - Finance3.3.9Diagnostic Misconceptions - Fixed Costs3.3.10Diagnostic Misconceptions - Break-even
3.4

Financial Documents

3.4.1Financial Statements3.4.2Income Statement3.4.3Understanding Business Performance
3.5

Account Analysis

3.5.1Business Calculations3.5.2Gross Profit - Calculations3.5.3Net Profit - Calculations3.5.4Business Calculations 23.5.5Business Calculations 33.5.6Liquidity
4

Marketing

4.1

Market Research

4.1.1Market Research4.1.2Forms of Market Research
4.2

The Market

4.2.1Customer Needs4.2.2Satisfying Customer Needs4.2.3Market4.2.4The Competitive Environment4.2.5Market Segmentation4.2.6Market Mapping - Price vs Quality4.2.7End of Topic Test - Marketing4.2.8Application Questions - Marketing4.2.9Diagnostic Misconceptions - Competition
4.3

The Marketing Mix

4.3.1Price4.3.2Price Penetration4.3.3Other Forms of Pricing4.3.4Product Design4.3.5The Product Life Cycle4.3.6Extending Existing Products4.3.7New Products4.3.8Benefits and Risks of New Products4.3.9Promotion4.3.10Public Relations and Sales Promotion4.3.11Sponsorship & Social Media4.3.12Product Placements4.3.13Promotional Mix4.3.14Place4.3.15Place 24.3.16Place 34.3.17M-Commerce4.3.18Benefits & Drawbacks of M-Commerce4.3.19End of Topic Test - Marketing Mix4.3.20Grade 9 - Marketing Mix4.3.21Diagnostic Misconceptions - Decreasing Price4.3.22Diagnostic Misconceptions - Advertise vs Promote4.3.23Diagnostic Misconceptions - Social Media
5

Business Operations

5.1

Economies & Diseconomies of Scale

5.1.1Economies of Scale5.1.2Diagnostic Misconceptions - Economies of Scale
5.2

Production

5.2.1Production Processes5.2.2Flow and Batch Production5.2.3Production Efficiency5.2.4Technology & Production5.2.5Diagnostic Misconceptions - JIT vs JIC
5.3

Factors of Production

5.3.1Factors of Production
5.4

Quality

5.4.1Importance of Quality5.4.2Identifying Quality5.4.3Total Quality Management5.4.4End of Topic Test - Operational Decisions

Practice questions on Not For Profit & Franchises

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    What are charities like Oxfam?Multiple choice
  2. 2
    What do the people who run 'unincorporated associations' have?Multiple choice
  3. 3
    Features of charities' legal structure:True / false
  4. 4
    What are some types of not-for-profit organisations?Fill in the list
  5. 5
    Which of these businesses uses franchising?Multiple choice
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Unlimited vs Limited Liability

Multinational Companies