Question

Which of the following statements about franchises are true? (Select all that apply.) Check All That Apply A franchise involves a license to use intellectual property. | A franchise involves initial sales of products and services as well as ongoing sales of products and services. Each part of the franchise arrangement must be evaluated to identify the performance obligations. In a franchise arrangement, a franchisee grants to the franchisor the right to sell the franchisor's products and use its name

Answer 1

True statements about franchises include that they involve licenses to use intellectual property, entail initial and ongoing sales, and require evaluation of each part to identify performance obligations. It's the franchisee who receives rights from the franchisor in a franchise agreement.

Step-by-step explanation:

Regarding the statements about franchises, the following are true:

• A franchise involves a license to use intellectual property. This is usually part of the franchise agreement where the franchisee gets the right to use the franchisor's trademarks, logos, and business systems.
• A franchise involves initial sales of products and services as well as ongoing sales. Upon starting, the franchisee typically pays an upfront fee, then continues to pay royalties based on sales.
• Each part of the franchise arrangement must be evaluated to identify the performance obligations. This is essential for proper accounting and management of a franchise.

However, the last statement is incorrect. In a franchise arrangement, it is the franchisee who receives the right from the franchisor to sell the franchisor's products and use its name, not the other way around.

Answer 2

True statements about franchises include the license to use intellectual property, ongoing sales of products and services, and the need to evaluate the franchise arrangement for performance obligations. However, it is the franchisor that grants rights to the franchisee, not vice versa.

Step-by-step explanation:

Among the statements about franchises, the first three are true. A franchise indeed involves a license to use intellectual property, which usually includes a trademark, business model, and other proprietary knowledge.

Also, a franchise involves not only the initial sales of products and services but ongoing sales as well, as the franchisee operates under the franchisor's business model.

Furthermore, in a franchise agreement, each part of the franchise arrangement must be evaluated to identify the performance obligations determined by the franchise agreement, ensuring compliance with the franchisor's standards and ongoing support requirements.

However, the last statement is incorrect. In a franchise arrangement, it is the franchisor that grants the franchisee the right to sell the franchisor's products and use its name, not the other way around.