Question 1: What factors should an entrepreneurs consider before choosing a form of ownership

1. Tax Consideration An entrepreneur should have a prediction or estimation on how much of profit the business going to make after it start. From the profit made, a tax will be imposed. Hence, entrepreneur should precisely estimate the amount of tax that he/she willing and able to pay. 2. Liability Exposure When considering business ownership type, this factor is very important to consider. Entrepreneurs must decide the extent to which they are willing to assume personal responsibility for their company financial obligations. From there, entrepreneurs should be able to determine which type of business suit them most. 3. Start-up and future capital requirements To start a business, one need some amount of capital to do so. Furthermore, as the business start to develop in the future, there will be also a need for capital investment to expand the business. Hence, entrepreneurs should consider their capital ability or limit to choose the form of ownership. Different type of business will carry different amount of capital to start and expand. 4. Control Each entrepreneurs will have differences in their preferences in term of management control. Some people prefer to have full control over their business without other party involvement. While some people prefer to have a different view or opinion in managing the businesses. Therefore, to consider the business ownership, this factor should be understand thoroughly. 5. Managerial ability Entrepreneurs need to evaluate their managerial ability. If they find that they may not have sufficient ability, they can bring in other people to become co-partner or manager. 6. Business Goal Before choosing a form of ownership, entrepreneurs have to consider their future plan of how big and profitable the companies going to be. 7. Management succession plan Next factor to consider is the entrepreneurs plan to pass their company on to next generation. Different type of ownership have different type of succession characteristics. As an example, for sole proprietorship, when the owner of the business dies, the company will die together with the owner. 8. Cost of Formation Different type of business ownership require different amount of cost to create. Some are very costly while others may be cheap to create. Therefore, entrepreneurs should undertant their capacity during the early stage of creating the business.

Question 2: Why are sole proprietorship so popular as a form of ownership? There are several reason as to why the sole proprietorship are so popular.
1) Simple to create To create a sole proprietorship type of business is very simple and fast. For some cases, it is even possible to be finished within one day only. 2) Least Costly to Begin In term of the cost, a sole proprietorship type of business require only a small cost for start-up. For the legal document, the owner should only acquire the business license to start. Compare to to other types, there several other of document need to be attend to which of course will require a certain fees. 3) Profit Incentives As the sole proprietorship means that the owner is absolutely own the business, hence all the profit being made by the company will goes to the owner after deducting wages and other expenditure. That is why a lot of people prefer to choose sole proprietorship. 4) Total Decision Making Authority As a sole proprietorship business owner, you are the only boss. Hence, you are in full control of your business path. There are no one will have the power to object your decision. 5) No Special Legal Restrictions Another reasons why sole proprietorship is so famous is that this type of ownership is the least regulated among any other type of business. 6) Easy to Discontinue One of the characteristic that make this type of ownership interesting is that it is easy to discontinue. One can terminate the business easily once they will like to or having any other commitment which require them to stop the business.

Figure 3: Scenario: Tax Deduction (where PHSP stands for Private Health Services Plan i.e hospitals)

Figure 2: As of 2012, 64% of Business is Sole Proprietorship

Question 3: What is franchising?

By definition, franchising is a system of distribution in which semi independent business owners (franchisees) pay fees and royalties to a parent company (franchisor) in return for: The right to become identified with its trademark. To sell its products or services. To use its business format and system.

Franchising is based on a continuing relationship between a franchiser and a franchisee. The franchiser provides valuable services such as market research, a proven business system, name recognition, and many other forms of assistance; in return, the franchisee pays an initial franchise fee as well as an ongoing percentage of his sales to the franchiser as royalties and agrees to operate his outlet according to the franchiser's system. Because franchisers develop the business systems their franchisees use and direct their distribution methods, they maintain substantial control over their franchisees. This standardization lies at the core of franchising's success as a method of distribution. The parent company also provides the franchisee with support (refer Figure), including advertising and training, as part of the franchising agreement. Franchising is a faster, cheaper form of expansion than adding company-owned stores, because it costs the parent company much less when new stores are owned and operated by a third party. On the flip side, potential for revenue growth is more limited because the parent company will only earn a percentage of the earnings from each new store. 70 different industries use the franchising business model, and according to the International Franchising Association the sector earns more than $1.5 trillion in revenues each year.

Figure 3: Types of Franchise Support

Question 4: Describe the types of franchising and provide one example of each
1. Trade-name franchising is when the franchisee purchases the right to use the franchiser's trade name without distributing particular products exclusively under the franchiser's name. This system involves a brand name such as True Value Hardware or Western Auto 2. Product distribution franchising involves a franchiser's licensing a franchisee to sell specific products under the franchiser's brand name and trademark through a selective, limited distribution network. This system is commonly used to market automobiles (Chevrolet, Oldsmobile, Chrysler), gasoline products (ExxonMobil, Sunoco, Texaco), soft drinks (Pepsi-Cola, Coca-Cola), bicycles (Schwinn), appliances, cosmetics, and other products. These two methods of franchising allow franchisees to acquire some of the parent company's identity. 3. Pure franchising involves providing the franchisee with a comprehensive business formal, including a license for a trade name, the products or services to be sold, the physical plant, the methods of operation, a marketing strategy plan, a quality control process, a two-way communications system, and the necessary business services. Pure franchising is the most rapidly growing of all types of franchising and is common among fast-food restaurants, hotels, business service firms, car rental agencies, educational institutions, beauty aid retailers, and many others. Common examples are McDonalds, Kentucky Fried Chicken (KFC), Dunkin Donuts and 7-Eleven. Although product and trade-name franchises annually ring up more sales than pure franchisees, pure franchising outlets' sales arc growing much faster.

Figure 4: Development of Franchises by Sector in Malaysia

Figure 5: Five Best Franchise Systems in Malaysia

Figure 6: Growth of Franchising Industry in Malaysia