Which of the following statements is true of a franchise process?
A)The founding of a franchise is quite different in form and method from creating a new business from scratch.
B)A market analysis by a franchisor is the best available method to understand a market and to organize franchise operations.
C)A significant up-front cash payment is necessary for making an initial fee payment by a franchisee.
D)The entrepreneur can easily leave the franchisee business if he or she does not enjoy the business venture.

Question

Quizplus · Accepted Answer

A significant up-front cash payment is usually required for making an initial fee payment by a franchisee. This payment is for the right to use the franchisor's name, trademark, business model, and other essential support. A franchise typically requires a lower level of risk than starting a new business from scratch because the franchisor has already tested the business concept and proven the viability of the product or service in the marketplace. Nonetheless, the franchisee is required to pay the franchisor a fee for the privilege of using the franchisor's business system, which frequently requires an enormous investment. Therefore, it is critical to analyze the market and the franchisor thoroughly before making any payments.

Which of the Following Statements Is True of a Franchise