Which of the Following Is Not an Advantage of Franchising

question 28

Multiple Choice

Which of the following is not an advantage of franchising for a franchisee?

• A) A franchisee can capitalize on the business experience of others.
• B) When problems arise, a franchisee can obtain guidance and advice from a franchiser.
• C) Franchised outlets are usually more successful than independently owned businesses with respect to long- term survival.
• D) A franchisee can participate in national promotional campaigns sponsored by a franchiser.
• E) A franchisee gains fast and selective product distribution without incurring the high cost of constructing and operating its own outlets.

---

Definitions:

Straight-Line

A method of calculating depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.

Discount Rate

The interest rate used to discount future cash flows to their present value.

Tax Bracket

A range of incomes taxed at a specific rate; tax brackets result in a progressive tax system, where taxation progressively increases as income grows.

Forecast Error

The difference between the expected or predicted values and what actually occurs, usually in the context of economic or financial forecasts.