Biology Forums - Study Force

Which of the following statements is TRUE about franchising?
A) Franchisees enjoy guaranteed minimum annual revenues based on their territory.
B) Franchisers encourage franchisees to be independent and creative in running their operations.
C) Franchisees have relatively lower risk than other small business start-ups.
D) Franchisees don't need to pay royalty fees to their franchisers.
E) All franchises restrict the location and number of their franchise locations.

C) A successful franchiser has determined, through trial and error, the best system of daily operations for the established business. New franchisees can therefore avoid many of the common start-up mistakes of new business owners. Because the franchise's success rests on a proven business model, franchisees are discouraged from making creative changes to operating methods. Franchisers do not guarantee minimum revenues to their franchisees, nor do they necessarily conduct any local market research on their behalf. Franchisees must pay a monthly royalty fee to the franchisor, which is typically 6–10 percent. Some franchises do not restrict the location or number of their franchise locations. In those instances, franchisees could experience serious competition not only from another company but also from other franchisees in the same franchise organization

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