Scenario 5-2

question 30

Multiple Choice

Scenario 5-2. Connie is considering opening a small bakery called Connie's Cookie Cupboard. She loves to bake cookies. Family and friends have told her she should consider opening a small business using her baking skills. Connie has no business experience and no idea where to start in opening her own business. She also has very few funds available. One day she is glancing through the newspaper and notices an ad for a bakery franchise that would like to open an outlet in the local mall. This franchise provides everything from equipment to packaging to full business services. She decides to look into the opportunity further.
Connie decides to pursue her franchise opportunity further. The bakery franchise looks promising. Since she has a limited amount of funds, no business experience, and no idea how to start a new business, she is seriously considering purchasing the bakery franchise located in the local mall. She obtains a copy of the document that will legally bind her.
-In Scenario 5-2, Connie is concerned that the bakery franchise did not open other outlets within 10 miles of the mall. She is concerned about ______.

• A) termination of the franchise agreement
• B) exclusive territory
• C) terms and renewal of the agreement
• D) mutual territory

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to changes in revenue, indicating the degree of fixed versus variable costs.

Fiscal Policy

Government policies regarding taxation and spending to influence the economy.

Monetary Policy

The actions of a central bank, currency board, or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates.