What is an advantage for the franchiser?

What is an advantage for the franchiser?

• A. Low risk form of growth as the franchisee invests the majority of the capital.
• B. Franchisees force the franchiser to assume all profits.
• C. Growth is slowed due to franchisees needing constant supervision.
• D. The franchiser pays all marketing costs for franchisees.

Answer: (A)

Franchising grows the business by turning external investors into the new locations, so the main idea being tested is that the franchiser gains faster expansion with much of the capital funded by others. The franchiser provides the proven concept, brand, training, and ongoing support, while franchisees pay upfront and cover ongoing costs, producing royalties and fees back to the franchiser. This arrangement spreads financial risk and accelerates geographic reach without the franchiser taking on large capital outlays or day‑to‑day operating risk. In short, you get more outlets and revenue potential with significantly less capital commitment. What makes this the best fit is that it emphasizes sharing the investment burden while retaining control over the system and brand through the franchise model. The other statements describe scenarios that don’t reflect how franchising typically works: profits aren’t driven to the franchiser by forcing all profits onto them, growth isn’t inherently slowed by supervision (franchisees operate under the system with oversight but enable faster expansion), and marketing costs are usually shared rather than paid entirely by the franchiser.

Franchising grows the business by turning external investors into the new locations, so the main idea being tested is that the franchiser gains faster expansion with much of the capital funded by others. The franchiser provides the proven concept, brand, training, and ongoing support, while franchisees pay upfront and cover ongoing costs, producing royalties and fees back to the franchiser. This arrangement spreads financial risk and accelerates geographic reach without the franchiser taking on large capital outlays or day‑to‑day operating risk. In short, you get more outlets and revenue potential with significantly less capital commitment.

What makes this the best fit is that it emphasizes sharing the investment burden while retaining control over the system and brand through the franchise model. The other statements describe scenarios that don’t reflect how franchising typically works: profits aren’t driven to the franchiser by forcing all profits onto them, growth isn’t inherently slowed by supervision (franchisees operate under the system with oversight but enable faster expansion), and marketing costs are usually shared rather than paid entirely by the franchiser.