Franchising Is a Form of Business Ownership in Which a Firm

question 2

Multiple Choice

Franchising is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to other business in exchange for:

• A) an initial franchise fee and an ongoing royalty
• B) an initial franchise fee
• C) an equity position in the new business
• D) an ongoing royalty
• E) an initial franchise fee and an equity position in the new business

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Definitions:

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders’ equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Equity

refers to the amount of ownership interest in a company, represented by the difference between assets and liabilities.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a particular point in time.

Contributed Capital

The total value of the capital that shareholders have directly invested in the company through the purchase of its stock.