Which of the Following Is a Drawback of Buying a Franchise

question 50

Multiple Choice

Which of the following is a drawback of buying a franchise?

• A) Half of the franchisees of a brand fail in their first year of operations.
• B) If the national brand suffers, so does the business.
• C) The concept, organizational structure, and operating practices may be wrong.
• D) The buyer has to finance the operation of the franchise.

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Definitions:

Resale Value

The estimated value for which an asset can be sold in the marketplace after some period of use.

Depreciation Tax Shield

A reduction in taxable income for firms, achieved through claiming depreciation expenses, thereby lowering the tax liability.

Corporate Tax Rate

The percentage of a corporation's taxable income that is paid as tax to the government, varying by country and sometimes within regions of a country.

CCA Class

Refers to the classification of assets for tax purposes in Canada, determining the rate at which an asset depreciates.