Asked by Saarthak Sharma on Jul 04, 2024
Verified
Franchisors typically experience a greater return on investment than if the firm were run entirely as a company-owned chain.
Franchisors
Companies or individuals that grant the license to a third party for the conducting of a business under their brand and name.
Return on Investment
A performance measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit of the investment divided by the cost of the investment.
Company-owned Chain
A series of businesses or retail outlets owned and operated by a singular company, as opposed to being franchises or independently owned.
- Recognize the pros and cons associated with using franchising for the expansion of a business.
Verified Answer
FA
fatima alkadriJul 09, 2024
Final Answer :
True
Explanation :
Franchisors benefit from the franchise model by receiving upfront franchise fees, ongoing royalties, and potentially other revenue streams without the capital expenditures and operational risks associated with opening and operating new locations themselves, often leading to a greater return on investment compared to running an entirely company-owned chain.
Learning Objectives
- Recognize the pros and cons associated with using franchising for the expansion of a business.