Explain the Extent of Liability of a Franchisor and a Franchisee

question 7

Essay

Explain the extent of liability of a franchisor and a franchisee with an example.

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Definitions:

Physical Capital

Physical capital encompasses the machinery, equipment, and infrastructure a business uses to produce goods or services, distinct from financial capital or human skills.

Average Total Cost

The total cost of production divided by the number of goods produced, accounting for both fixed and variable costs.

Output

The total amount of goods or services produced by a firm, industry, or economy within a specific period.

Fixed Cost

A cost that does not change with the level of output or production, such as rent or salaries.