|  Co-operatives
A co-operative is an enterprise owned and controlled by the people working in it. Co-operatives are governed by an Act, whose main provisions state:
- Each member of the co-operative has equal control through the principal of ‘one person one vote'.
- Membership must be open to anyone who satisfies the stipulated qualification.
- Profits can be retained in the business or distributed in proportion to members' involvement, for instance, hours worked.
- Member must benefit primarily from their participation in the business.
- Interest on loan or share capital is limited in some specific way, even if the profits are high enough to allow a greater payment.
It is certainly not a legal structure designed to give entrepreneurs control of their own destiny and maximum profits. However, if this is to be the system adopted, you can register with the registrar of companies. You must have at least seven members at the outset. They do not have to be full-time workers at first. As in a limited company, a registered co-operative has limited liability for its members and must file annual accounts, but there is no charge for this. Not all co-operatives bother to register, as it isn't mandatory, in which case they are treated in law as a partnership with unlimited liability.
Co-operatives are not common throughout the entire entrepreneurial world, although some countries provide for companies with a structure similar to the Indian-style co-operatives.
Franchising
Franchising is something of a halfway house, lying somewhere between entrepreneurship and employment. It holds many of the attractions of running a small business whilst at the same time eliminating some of the more unappealing risks. For example, the failure rate for both franchisers and franchisees is much lower than for the small business sector as a whole.
Types of Franchising
A Distributorship: This could be for a particular product, such as a make of car. It is also sometimes referred to as an agency, but there is a fundamental difference between these two concepts. An agent acts on behalf of a principal (even though he or she may have an agency for the products and services of more than one principal), what the agent does, says or represents to third parties is binding on the principal in question, as if they were employer and employee. A distributorship, however, is an arrangement where both parties are legally independent, as vendor and purchaser, except that the purchaser, in exchange for certain exclusive territorial rights, backed up by the vendor's advertising, promotion and possibly, training of staff, will be expected to hold adequate stock and maintain the premises in a way that reflects well on the vendor's product or service.
A License to Manufacture: This applies to a certain product within a certain territory and over a given period of time. The licensee may have access to any secret process this involves and can use the product's brand name in exchange for a royalty on sales.
This arrangement resembles a dictatorship. Licenser and licensee are independent of each other, except that the licenser will no doubt insist that the licensee complies in order to preserve the good name of the product. The arrangement is often found in industry and a well-known example is Modi Xerox's license to produce the photocopying devices pioneered by the Xerox Corporation.
The Use of a Celebrity Name: The name of a well-known person can be used to enhance the sales appeal of a product and guarantee, at least by implication, its quality.
The most common example is the endorsement, by a sports personality, of equipment associated with the sports person's field of sport and bearing his or her name, in return for a royalty payment by the manufacturer.
The Use of A Trade Mark: Here a widely recognised product is exploited commercially for a fee, subject to certain licensing conditions, rather than the name of an individual. An instance with which many readers will be familiar was Rubik's cube, always shown with the symbol TM beside it. |
