Which of the Following Statements Is Incorrect Regarding Franchising

question 58

Multiple Choice

Which of the following statements is incorrect regarding franchising?

• A) In some industries, such as automotive and retail food, franchising is a dominant form of business ownership and growth.
• B) There are some instances in which franchising is not appropriate.
• C) Franchising is a relatively new form of business organization.
• D) Franchising, by its very nature, involves the sharing of knowledge between a franchisor and a franchisee.
• E) Franchising is a relatively poorly understood form of business ownership and growth.

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Definitions:

Product Differentiation

The process through which companies distinguish their products or services from those of competitors, through attributes like quality, design, or branding.

Competitors

Companies or entities that are in the same industry and compete against each other for market share by offering similar products or services.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers, typically downward sloping.

Long-Run Equilibrium

A state in economics where all factors of production are variable, leading to a situation where all firms in a competitive market make zero economic profit.