Question

Which of the following statements is true of franchises set up across borders?

a. A franchisee always has exclusive rights in the geographic area in which it operates.
b. The minority participation in franchises across borders, both as franchisees and franchisors, is at its peak.
c. Franchisees can sell their franchises to other investors without notifying the franchisor.
d. The limit of a franchisee's right over a territory is decided through a franchise agreement.

Answer 1

The true statement about franchises set up across borders is that the limit of a franchisee's rights over a territory is outlined in the franchise agreement. Franchise agreements determine geographical operational limits and transfer conditions.Hence, the correct answer is option D

Step-by-step explanation:

The student asked which statement is true of franchises set up across borders. The correct answer is: d. The limit of a franchisee's right over a territory is decided through a franchise agreement.

Franchising as a business model involves purchasing the rights to operate a business based on the franchisor's model, and usually includes benefits such as training and supply chain support. In exchange for these benefits, the franchisee pays a franchise fee along with ongoing royalty fees. One of the key aspects of such agreements is territorial rights, which specify the geographical area within which the franchisee can operate and prevent competition with other franchisees.

The franchise agreement will outline the specifics of these territorial rights and any conditions related to transferring the franchise to another investor. Often, franchisors must approve any sale of the franchise, as they have a vested interest in ensuring that any new franchisee will uphold the brand's standards and run the business effectively.