Final answer:
Franchising fees in monopolistic competition act as barriers to entry, which require significant investment from potential new market entrants, thereby restricting competition.
Step-by-step explanation:
In the context of market structures, franchising fees represent a form of barriers to entry for monopolistic competition. These fees can discourage or prevent new competitors from entering a market as they often require significant upfront capital, on top of ongoing royalties and marketing fees. These financial requirements can be prohibitive for new entrants lacking the necessary resources.
Monopolistic competition is characterized by many firms selling differentiated products, which can be unique in terms of characteristics, location sold, intangible aspects, or perceptions. However, besides product differentiation, other aspects like franchising fees play a pivotal role in determining the competitive landscape by creating hurdles for new firms aspiring to enter the market.