Which of the Following Is an Advantage to the Franchisor

question 14

Multiple Choice

Which of the following is an advantage to the franchisor in a franchise agreement?

• A) Opportunity to start a business with limited capital
• B) Access to local advertising materials
• C) Fast and selective distribution of products
• D) Chance to participate in national advertising
• E) Chance to minimise costs through cooperative buying

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Definitions:

Long-run Average Total Cost

The average cost per unit of output over the long term, where all inputs are considered variable.

Output Q₀

The quantity of goods or services produced in a given period of time, denoted as Q₀ to specify a particular amount.

Diseconomies of Scale

The phenomenon where, as a firm expands, its costs start increasing per unit of output, usually due to inefficiencies and management challenges that arise with size.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase and may decrease.