The franchise fee is %u201Cthe one-time payment made to become a franchisee%u201
ID: 402981 • Letter: T
Question
The franchise fee is %u201Cthe one-time payment made to become a franchisee%u201D (Hatten, 2009, p. 142). Hatten also stated that %u201Csome agreements require you to have a percentage of the total franchise fee from a non-borrowed source%u201D (p. 142-143). Class, why would a franchise have this requirement? Would this requirement cause you to turn down this franchise?The franchise fee is %u201Cthe one-time payment made to become a franchisee%u201D (Hatten, 2009, p. 142). Hatten also stated that %u201Csome agreements require you to have a percentage of the total franchise fee from a non-borrowed source%u201D (p. 142-143). Class, why would a franchise have this requirement? Would this requirement cause you to turn down this franchise?
Explanation / Answer
Having the requirement being from a non borrowed source is one way of requiring finical stability from the purchasurer. If someone has not had enough success in the past to increase their savings then they are less likely to have success in the future.
If a franchise did not have this requirement I would be concerned for the overall health of the franchise if there was not another method in place to handle similar problems. Vetting franchise owners is critical to keeping the franchise healthy.
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