To Protect Themselves Against Liability, Franchisors Often Require Individual Franchisees

question 51

Multiple Choice

To protect themselves against liability, franchisors often require individual franchisees to: ______.

• A) take out fraud insurance.
• B) register with the attorney general.
• C) publicly disclose their own separate business identities.
• D) disavow any connection with the franchisor.

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Definitions:

Expense Accounts

These are ledgers that track the costs incurred by a business during its operations, excluding the purchase of inventory.

Income Summary Account

A temporary ledger account used to transfer the balances of all revenue and expense accounts at the end of an accounting period to determine the net income or loss.

Proprietorship

A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.

Expenses

Expenses are the costs incurred in the process of generating revenue, including operational costs, salaries, and utility expenses, critical for determining a company's net income.