Which of the Following Is Not an Advantage of Franchising

question 21

Multiple Choice

Which of the following is not an advantage of franchising for the franchisee?

• A)The franchisee can capitalize on the business experience of others.
• B)When problems arise, the franchisee can obtain guidance and advice from the franchiser.
• C)Franchised outlets are usually more successful than independently owned businesses with respect to long-term survival.
• D)The franchisee can participate in national promotional campaigns sponsored by the franchiser.
• E)The franchisee gives up a certain amount of control when participating in a franchise agreement.

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Definitions:

Average Rate

The mean value calculated by dividing the sum of all rates by the number of rates.

Payback Period

The length of time required to recover the initial cost of an investment, calculated by dividing the initial investment by annual cash inflows.

Cost of Capital

The yield a business needs to achieve on its investments to keep its market price stable and draw in capital.

Cash Flows

Cash flows refer to the net amount of cash and cash-equivalents being transferred into and out of a business.