Franchising Is a Form of Business Ownership in Which a Firm

question 73

Multiple Choice

Franchising is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to another business in exchange for ________.

• A) an initial franchise fee and an ongoing royalty
• B) a one-time franchise fee
• C) an equity position in the new business
• D) an ongoing royalty
• E) an initial franchise fee and an equity position in the new business

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.