Which of the Following Is True for Franchisors

question 2

Multiple Choice

Which of the following is true for franchisors?

• A) The franchisor has to pay the franchisee to be part of the franchise system.
• B) The franchisor licenses the trademark from the franchisee.
• C) The franchisor must change its operations to suit those of the franchisee.
• D) The franchisor collects royalty payments from the franchisee.
• E) The franchisor pays startup costs for the franchisee.

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Definitions:

Short Run

A period in which at least one factor of production is fixed and cannot be fully adjusted.

AVC Curve

The average variable cost curve, which shows how the unit variable cost of production changes with the level of output.

Profit-Maximizing

The process or strategy of adjusting production and pricing to achieve the highest possible profit margins for a business or firm.

Firm

A business organization that sells goods or services in order to make a profit.