The Difference Between a Franchise and Licensing Contract Is That

question 3

Multiple Choice

The difference between a franchise and licensing contract is that

• A) a franchise contract has a broader range of factors and is usually longer in duration.
• B) a franchise contract must include a foreign government.
• C) a licensing contract covers more aspects of operations.
• D) a franchise contract involves less control and less risk.

---

Definitions:

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much contributes to covering fixed costs and generating profit.

Variable Expense Ratio

A financial metric that measures variable costs as a percentage of sales, reflecting how those costs fluctuate with production output.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in sales volume, indicating the level of fixed costs in the business structure.

Sales Commissions

Payments made to sales personnel based on sales volume or value, serving as an incentive for increased sales performance.