High School

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Which best describes entrepreneurs who want to open a franchise?

A. They buy the rights from the parent company and create their own rules.
B. They buy the rights from the parent company and invest in a location approved by the parent company.
C. They invest in a location and create a business model for the franchise.
D. They invest in a location and develop a trademark for the franchise.

What is the difference between sole proprietorships and partnerships?

A. Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities.
B. Sole proprietors share responsibilities, while partners are responsible for only a portion of the business.
C. Sole proprietors split profits and share liabilities, while partners keep all profits and have unlimited liability.
D. Sole proprietors pay taxes only on business profits, while partners do not have to pay taxes on profits.

Answer :

A franchise requires buying rights from a parent company and adhering to its rules, unlike creating an independent business. The key differences between a sole proprietorship and a partnership are how profits and liabilities are handled, with sole proprietors being fully responsible and partners sharing these elements. Therefore, the correct option is A.

Entrepreneurs who want to open a franchise typically buy the rights from the parent company and must operate according to the parent company's established rules, including investing in an approved location. This agreement includes paying a franchise fee as well as ongoing royalty fees. A franchisee does not create their own rules or develop a trademark, as these elements are provided by the franchisor.

There is a clear distinction between sole proprietorships and partnerships. A sole proprietor keeps all profits and has unlimited liability, meaning they are personally responsible for all debts and losses the business incurs. Conversely, in a partnership, the owners share profits and liabilities, offering a level of protection that sole proprietors do not have. Also, while both sole proprietors and partners pay taxes on profits, sole proprietors do so as individuals, whereas partners must consider the partnership's arrangements.

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