Which of the Following Statements Is True of a Franchise

question 77

Multiple Choice

Which of the following statements is true of a franchise process?

• A)The founding of a franchise is quite different in form and method from creating a new business from scratch.
• B)A market analysis by a franchisor is the best available method to understand a market and to organize franchise operations.
• C)A significant up-front cash payment is necessary for making an initial fee payment by a franchisee.
• D)The entrepreneur can easily leave the franchisee business if he or she does not enjoy the business venture.

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Definitions:

Times Interest

A financial ratio, also known as interest coverage ratio, that measures a company's ability to meet its interest payments on outstanding debt.

Equity Multiplier

A financial leverage ratio that measures the proportion of a company's assets that are financed by stockholders' equity.

Dividend Yield

The ratio of a company's annual dividend payments to its share price, reflecting the earning potential from dividends for investors.

Receivable Turnover

A financial metric that measures the efficiency of a company in extending credit and collecting debts, calculated as sales divided by the average accounts receivable.