Chen Is a Franchisee of a Local Retail Shop

question 64

Multiple Choice

Chen is a franchisee of a local retail shop.One of his chief concerns regarding owning a franchise is that:

• A) The franchising agreement is too restrictive.
• B) The franchisor provides him with a wide range of support.
• C) The franchise has the benefit of name recognition.
• D) The franchisor can negotiate better deals on ingredients,supplies,and real estate,because of its financial strength.

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Definitions:

Desired Rate

An expected or targeted rate of return or interest rate that an individual or company aims to achieve on investments or projects.

Average Rate of Return

A profitability gauge for investments, determined by dividing the initial investment cost into the average yearly profit.

Present Value Factor

A factor used to calculate the present value of a cash flow to be received in the future.

Cash Payback Period

The period of time required for the return on an investment to "repay" the original capital cost of the investment.