Multiple Choice
Which of the following roles is most aware of the entire business organization?
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1. Introduction to Accounting
Business Organization
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Which type of business organization typically enters into contracts with other businesses to allow them to operate under its name and system in exchange for a fee?
A
Corporation
B
Partnership
C
Franchise
D
Sole proprietorship
Verified step by step guidance1
Understand the concept of a franchise: A franchise is a type of business organization where the franchisor (the owner of the brand or system) allows the franchisee (another business) to operate under its name and system in exchange for fees or royalties.
Compare the characteristics of a franchise with other business organizations: Corporations, partnerships, and sole proprietorships do not typically involve licensing a name or system to other businesses in exchange for fees.
Recognize that franchises are unique in their structure: They involve contractual agreements between the franchisor and franchisee, which is not a feature of corporations, partnerships, or sole proprietorships.
Identify the correct answer based on the definition and characteristics: The business organization that enters into contracts with other businesses to operate under its name and system in exchange for a fee is a franchise.
Conclude that the correct answer is 'Franchise' and understand why other options do not fit the description provided in the problem.
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