Cindy Owns a 7-Eleven Franchise

question 173

Multiple Choice

Cindy owns a 7-Eleven franchise.What is the primary disadvantage of owning a franchise for Cindy?

• A) She has to pay royalties to the franchisor.
• B) She cannot use her name as the restaurant name.
• C) The franchisor still retains a great deal of control.
• D) Cindy is not allowed to hire her own employees.
• E) Cindy may not find ways to improve operations.

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Definitions:

AASB 16

An Australian accounting standard that introduces a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases.

IFRS 16

An International Financial Reporting Standard that provides guidance on accounting for leases, requiring lessees to recognize most leases on their balance sheets.

Lease Receipts

Income received from leasing out an asset to a lessee under a lease agreement.

Finance Lease

A lease agreement that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred.