Which term describe a business owned by its members who are customers, not shareholders?

Which term describe a business owned by its members who are customers, not shareholders?

• A. Franchise
• B. Online business
• C. Mutual organisation
• D. Limited company

Answer: (C)

Ownership by members is the defining idea. A mutual organization is owned and controlled by its members, who are also customers or users of the service. Because the aim is to benefit those members, they typically have a say in decisions and can receive benefits from the profits, such as discounted prices or refunds. Building societies are a common example of this structure. This differs from a franchise, where ownership is tied to a franchise model with a franchisor and franchisees; and from a limited company, which is owned by shareholders. An online business isn’t about who owns it, so it doesn’t specify the customer-owned structure described here.

Ownership by members is the defining idea. A mutual organization is owned and controlled by its members, who are also customers or users of the service. Because the aim is to benefit those members, they typically have a say in decisions and can receive benefits from the profits, such as discounted prices or refunds. Building societies are a common example of this structure. This differs from a franchise, where ownership is tied to a franchise model with a franchisor and franchisees; and from a limited company, which is owned by shareholders. An online business isn’t about who owns it, so it doesn’t specify the customer-owned structure described here.