Which of the Following Statements Is Incorrect Regarding Product and Trademark

question 16

Multiple Choice

Which of the following statements is incorrect regarding product and trademark franchises?

• A) Rather than obtaining a royalty or franchise fee, the product and trademark franchisor obtains the majority of its income from selling its products to its dealers or distributors at a markup.
• B) General Motors establishes product trademark rather than business format franchises.
• C) Product trademark franchises are by far more popular than business format franchises.
• D) Product and trademark franchisees are typically permitted to operate in a fairly autonomous manner.
• E) A product trademark franchise typically connects a single manufacturer with a network of dealers or distributors.

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Definitions:

Direct Financing Lease

A leasing arrangement where the lessor purchases an asset and leases it to the lessee, effectively acting as a financier by not transferring ownership.

Operating Lease

An agreement permitting the utilization of a property without transferring ownership rights to it.

Lessor

The party in a lease agreement that owns the asset and grants the lessee the right to use the asset in return for lease payments.

Bargain Purchase Option

A lease clause allowing the lessee to purchase the leased asset at a price significantly lower than its expected fair market value at the end of the lease term.