Answer :

Final answer:

While profits after purchasing a franchise do go to the entrepreneur, they often have to manage various other costs such as leasing, expansion, and other industry-specific expenses. Therefore, not all the profit is retained by the entrepreneur as there are ongoing costs to consider in the long run.

Explanation:

The question asks whether, once a franchise is paid for, all profits go to the entrepreneur. In most scenarios, this is not exactly the case. After the initial cost of acquiring the franchise, there are numerous other expenses to consider. This can range from variable factors in the long run like leasing or moving to a larger or smaller space, to certain restrictive costs such as renting retail space or acquiring radio frequencies for broadcasting if applicable.

In a competitive market, businesses are always seeking to make a profit. One way of achieving this is by expanding existing factories or building new ones when profits increase in the short run. This can lead to new firms entering the industry, a phenomenon known as entry.

Therefore, while the profit after franchising purchase does technically go to the entrepreneur, a significant portion of it is often redirected towards managing these various running and expansion costs.

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