If a Firm Is Advertising That It Is Selling Franchise

question 103

True/False

If a firm is advertising that it is selling franchise opportunities, the prospective franchisee can be assured that the government has performed due diligence on this company, and has deemed it a safe investment.

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Definitions:

Low-margin Items

Products or services that generate a minimal profit margin, often sold to attract customers or achieve volume sales.

Contribution Margin Ratio

A financial metric indicating the portion of sales revenue that is not consumed by variable costs and therefore contributes to covering fixed costs.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.

Break-even Point

The level of production or sales volume at which total revenues equal total costs, resulting in no net profit or loss.