Which Statement Best Describes the General Success Rate for Franchises

question 11

Multiple Choice

Which statement best describes the general success rate for franchises?

• A) Franchises, like other small businesses, have a very high rate of failure.
• B) Franchises are slightly more successful overall than other types of businesses.
• C) Franchises have about a 50 percent chance of being successful.
• D) Franchises have a very high success rate compared to other small businesses.
• E) Obtaining a franchise is a guarantee for a successful business.

---

Definitions:

Debt-Ratio

is a financial metric that compares a company's total debt to its total assets, showing how much of the company's assets are financed by debt.

Capital Structure

Refers to how a firm finances its overall activities and growth through different sources of funds, such as debt and equity.

M&M Proposition I

A theory stating that, in a perfect market, the value of a firm is unaffected by how it is financed, regardless of the debt-to-equity ratio.

Capital Structure

Refers to the way a corporation finances its assets through a combination of equity, debt, or hybrid securities.