Three Downsides to Buying a Franchise Include High Initial Costs

question 27

True/False

Three downsides to buying a franchise include high initial costs, the ongoing percent-of-sales royalty fees, and the franchise requirements, which, in effect, reduce the owner's independence.

---

Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.

LIFO

A method of inventory valuation called "Last-In, First-Out," where the most recently acquired items are the first to be expensed.

Tax Advantage

A tax advantage refers to the economic bonus that applies to certain investments or transactions that are favored by tax policy, allowing for a reduction in tax liabilities.