Michael is a franchise restaurant owner.Which of the following best describes his franchising costs?
A)a franchise fee to start,a monthly royalty as a percentage of sales,and other operational costs
B)a royalty to the franchisor,calculated as a percentage of net income plus other operational costs
C)the same as any other restaurant owner
D)a franchise fee to start,plus other operational costs

Question

Quizplus · Accepted Answer

Franchise restaurant owners generally pay a franchise fee to start and a monthly royalty as a percentage of sales to the franchisor. In addition to these costs, franchise owners may also incur other operational costs such as marketing expenses, training costs, and supply chain costs. Therefore, option A is the best choice that describes franchising costs. Option B is incorrect because franchising costs are typically calculated as a percentage of sales rather than net income. Option C is incorrect because franchising costs are generally higher than those of an independent restaurant owner. Option D is incomplete because it only mentions the franchise fee, but not the monthly royalty or other operational costs typically associated with franchising.

Michael Is a Franchise Restaurant Owner