A franchise is a system of distribution in which semi-independent business owners pay ________ and ________ to a parent company in return for the right to become identified with its trademark, to sell its product or services, and often to use its business format and system.

Question

Quizplus · Accepted Answer

Franchise owners typically pay upfront fees to join the system and ongoing royalties based on their sales. This helps the parent company maintain control over the use of its trademark and business format while allowing franchise owners to benefit from the brand recognition and support provided by the parent company. Option A is close but not entirely accurate, as franchise owners typically pay a fixed royalty rate rather than a percentage of sales. Option C is not typically seen in franchise agreements. Option B is too vague and does not accurately describe the types of costs associated with franchising.

A Franchise Is a System of Distribution in Which Semi-Independent