Franchising Is a Concept That Allows Hotels To

question 44

Multiple Choice

Franchising is a concept that allows hotels to:

• A)expand rapidly by using other people's money
• B)pay a fee based on a percentage of gross revenue to the owners
• C)provide tax benefits to investors
• D)provide careful consideration to the location of new properties

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Definitions:

Contractual Obligation

A legal requirement that a party must adhere to as stipulated in a contract, enforceable by law.

Money Expenditures

The total amount of money spent by individuals, firms, or governments on goods and services within a specific period.

Implicit Costs

The opportunity costs that arise from using resources that could have been employed in an alternative use, not directly paid in a financial form.

Normal Profit

The minimum profit necessary for a company to remain in business, equal to the opportunity cost of capital and entrepreneurial effort not invested elsewhere.