Which of the Following Is True About Franchising

question 3

Multiple Choice

Which of the following is true about franchising?

• A) It can be conducted as a sole proprietorship or a corporation but not as a partnership.
• B) It typically involves a corporation as a franchisor.
• C) It does not include the risk of violating federal and state antitrust laws under any circumstances.
• D) It is not contractual.

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Definitions:

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments through calculating the rate of return where the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.

Payback Period

A rephrased definition: The duration needed to recover the initial expenditure on an investment through the cash flows it generates.

AAR

Average annual return, indicating the mean yearly profit or loss generated by an investment over a specified period.