Lucia and Antonio are husband and wife and together they operate Nonnas Pasta Bar, a small restaurant on Lygon Street in Carlton which serves traditional Italian cuisine. Lucia and Antonio opened Nonnas Pasta Bar in 1982 and it has boomed since opening. Lucia and Antonio hold equally share in profits made. Lucia is responsible for creating and revising the menu options, the bookkeeping of the restaurant, whilst Antonio undertakes the chef duties for the restaurant. Their children, Nico and Marcello currently help at the restaurant, as waiters. After their longstanding soon to be 40-year stint in the hospitality sector, Lucia and Antonio have made the decision to retire at the end of December 2022. They speak with Nico and Marcello about taking over the reins of the restaurant. Nico is especially excited at this opportunity. He says they should ideally expand the operations to hire some employees, such as an extra chef, as well as waiters and drivers for food deliveries. Marcello agrees, saying the restaurant could also use with a revamp to modernise it for the evolving food scene. Lucia and Antonio are pleased to pass on Nonnas Pasta Bar to their sons, however they are not sure of the implications of the changes proposed by their sons.

1. What type of business organisation is Lucia and Antonio currently operating, based on the facts provided?

2. Given the change in circumstances with their retirement and children taking over, is the current business structure is still suitable? Or should they now consider another form of business structure? If the latter, which form of business structure would be suitable and why? What would be the benefits and risks of any new proposed structure?