1. The prices for product
The price of products in a franchise would always be determined by the owner of the franchisee.
In the end Franchise is a method for the franchisee to earn more profit with less management. The franchisee need to determine the price of the products to maintain the profit level.
on top of that, the franchise could have a bad reputation among customers if the price levels are different from one store to another.
2. It can cause tension in or harm family relationships.
Firing would most likely be taken personally by the employees. If that employees is someone form our family, the tension could be extended to our personal life since we are most likely to see that family member again on several different occasions.
3. It can cover many of the costs if a disaster occurs.
The cost from disaster could be extremely huge because it could potentially destroy large number of our assets on a single occasion.
Buying insurance for such disaster could be economically beneficial because the insurance expense only a small compared to the financial loss that might occurs because of the disasters.
4. True
When a company want to expand, this mean that the company would have to handle more consumers. When this happen, the company needs additional expense to hire more workers to handle increasing consumers.
On top of that , the company would also need more equipment and space to be able to increase the amount of goods it can produce.
5. False
Brand-new business often seen as very risky by loan providers since they do not have enough data to assess the owner's ability and how the market would respond.
An existing business on the other hand, tend to have several tracks records that can be used to analyze the risk. Because of this, existing business tend to be seen as more favorable for credit providers,
6. A change in government regulations
Uncontrollable risks refers to the type of risk that cannot be predicted and influenced by the decisions of the company. A change in government regulations is a result of Congress that elected by the majority of the people. The only thing that the company could do is adapt to the changes.
7. All of the above
When we buy an existing businesses, many of the customers would fear that the quality of the product/services would change in our management. This might cause them to move to the competitors. On top of that, experienced staff might have some sort of emotional connection with the previous owners. So , there is a chance that they might leave us to join other projects started by the previous owners.
8. The franchise agreement.
The franchise agreement would clearly specify the things that the corporation can and cannot do during the franchise relation. Some corporation might require the franchiser to follow all the orders made by the franchisee while other corporations might give total freedom for the franchiser to manage their stores.
9. It may lose clients.
When business have more clients than they can handle, a lot of those clients would be neglected since the businesses do not have enough resources to serve those customers.
This would make those clients felt dissatisfied or offended and choose to give their money to the competitors.
10. a flood
In business, a risk would be considered as 'uninsurable' if the insurance provider has a high chance of losing their money
Damage from natural disaster is very unlikely to occur to their clients, which is why many insurance companies would still provide coverage for flooding.
11. False
Even if the franchise is successful there might be other factors that can make the franchisee unable to continue the contract.
For example, the country of the franchiser could change its tax law into something that is seen as unfavorable by the franchisee and force them to move out from the country.
