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 Total Cost

The total cost of production divided by the number of goods produced; a measurement of the cost of producing each unit.

Marginal Costs

The increase in cost resulting from the manufacture of one plus unit of a good or service.

Fixed Costs

Costs that do not change with the level of output, remaining constant regardless of the scale of production or services provided.

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equal to the price of the good.