Franchise Fees

question 18

Multiple Choice

Franchise fees:

• A) Compensate the franchisee for the use of its trademark.
• B) Pay for all physical assets e.g., equipment and building), needed to operate the franchise.
• C) Is usually a one-time flat fee paid by franchisees to franchisors.
• D) Is based on a percentage of the franchisee's gross sales.
• E) Is a government tax to register the franchise.

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Definitions:

Favorable Variance

A financial situation where actual costs are less than the standard or budgeted costs, or actual revenue is higher than expected.

Quality Control Standards

Guidelines and criteria set to ensure the products meet certain thresholds of quality and reliability before they are delivered to customers.

Flexible Standards

Performance benchmarks that can adjust based on changes in actual conditions, allowing for more accurate budgeting and control.

Materials Price Variance

A measure of the difference between the actual cost of materials and the expected cost at standard prices.