What Should Be the Primary Investigation for a Potential Franchisee

question 79

Multiple Choice

What should be the primary investigation for a potential franchisee?

• A) evaluate the franchisor
• B) evaluate the franchisor's suppliers
• C) evaluate existing and previous franchisees
• D) evaluate competitors of the franchisor

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Definitions:

Overhead Allocation

The process of distributing indirect costs to products, services, or departments based on relevant allocation bases.

Cost-Based Pricing

A strategy for setting prices where a specific additional amount is added to the product's unit cost to determine the sale price.

Underpriced Products

Items sold at a price below their market value or cost of production, potentially leading to losses or reduced profit margins for the seller.

Absorption Cost

A method of costing that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.