Which of the following is true about a franchise?
A) It is one of the least common ways to get involved in a business.
B) It runs under the franchisee's name and guidance.
C) The franchise parent receives a specified share of income or a flat fee from the franchisee.
D) It makes use of things like opensource software, while containing costs, staying small, and keeping operations as simple as possible.
E) It refers to a business in which material or goods are given to another person, but ownership is retained until the goods are sold.

Question

Quizplus · Accepted Answer

A franchise is a business model in which a franchisor grants a franchisee the right to use its brand name, products, and services. For this right, the franchisee pays the franchisor either a specified share of income or a flat fee. The franchisor provides support and guidance to the franchisee, but the franchisee is responsible for the day-to-day operations of the business. Option A is incorrect because franchises are a common way for people to get involved in entrepreneurship. Option B is incorrect because the franchise runs under the franchisor's name and guidance. Option D is incorrect because while franchises do aim to contain costs, they are not limited to using open-source software, and they can actually grow quite large. Option E is incorrect because it describes consignment, not franchising.

Which of the Following Is True About a Franchise