Question

Declan plans to open up three Pizza Pals franchises in the greater Phoenix area. He tells you that he plans to negotiate with the franchisor to get rid of the giant Preston the Pizza that sits on the roof of all Pizza Pal restaurants. Declan is likely to learn that
Multiple Choice

the parent company will give him a start-up cost break for the same amount that it would have to pay for three of these signs.

he is making a smart decision because it is not the sign that will bring customers to his pizza joint. It is the wide selection of toppings and six different crust offerings that keep the customers coming in.

it is nonnegotiable due to company rules.

Answer 1

Answer:

The correct answer is letter "C": it is non-negotiable due to company rules.

Explanation:

A franchise is a type of business by which an individual (franchisee) accesses the trademarks and proprietary patents of a large business (franchisor) in exchange for a fee paid regularly (royalty). The guidelines of how the franchisee will be handled are provided by the franchisor and even sometimes managerial and accounting practices are shared.

However, taking over a market by wiping out competitors is not one of the terms franchisees and franchisors deal with. It could be considered illegal by antitrust laws covered in the Federal Trade Commission (FTC) Act of 1914. If the franchise attempts to lead the market, it must find ways to do it through fair practices which most likely involve creating a competitive advantage.