There Are Three General Types of Franchising Arrangements

question 10

Multiple Choice

There are three general types of franchising arrangements. In one approach, the franchisor authorizes retailers to sell a particular brand-name item. This type of arrangement is common in all of the following areas except

• A) the soft-drink industry.
• B) truck and car sales.
• C) shoe sales.
• D) the gasoline industry.
• E) paint sales.

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Definitions:

Contribution To Revenue

The portion of sales revenue that is not consumed by variable costs and contributes to covering fixed costs.

Double-Declining-Balance

A method of accelerated depreciation where an asset's book value is reduced at double the rate of traditional straight-line depreciation.

Book Value

The net value of an asset, calculated as the original cost minus accumulated depreciation, depletion, or amortization.

Plant Asset

Long-term tangible asset that is used in the production process of a company, such as machinery, buildings, and equipment, contributing to the company's operations.