Franchising accounts for more than $1 trillion of annual U.S. sales and nearly one-third of all retail transactions. Franchises are distinguished by three characteristics that are: (1) the franchisee pays for the right to be part of the system: (2) the franchisor provides its franchisees with a system for doing business; and (3)

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The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments. This is the third characteristic that distinguishes franchises. Option A is incorrect as it only mentions the franchisee's payment for the right to belong, but not about the franchisor receiving a percentage of sales. Option B is incorrect as it suggests that the franchisor controls all actions of the franchisee, which is not entirely true. Option D is incorrect as the franchisee must follow the established system provided by the franchisor. Option E is incorrect as the franchisor usually has control over the marketing plan.

Franchising Accounts for More Than $1 Trillion of Annual U