Franchises operate within various business structures. The one you choose will affect your future legal obligations so it’s vital you get professional help with identifying the right one. 

Sole Trader

This is the simplest structure. You’ll trade in your own name as the only business owner. 

• It’s cheaper and easier to set up than a company.
•  If something goes wrong there’s no protection for your personal assets.

Partnership or joint venture

A partnership shares the revenue, assets and liabilities of the business between two or more people.

• You can share risks and costs.
• Problems – and extra costs – can arise if a partner wants to leave or change the arrangement.

Company

A company has a separate legal existence from its owners, who are known as members or shareholders. 

• Your personal assets are protected if there are any losses within the business.
• It takes more time and money to establish.

Trust

A trustee, either an individual or a corporation, operates the business. 

• There are possible tax benefits for beneficiaries.
• Tax is payable at the highest marginal rate if the trust fails to distribute the profit or income to beneficiaries every financial year.

Red flag moment

The wrong business structure can limit your potential for success.