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Patil wants to start his business by taking a franchisee of McDonalds. He is planning to take the franchisee with the aim of speedy growth. The only way he could think of if taking the franchisee and McDonalds is the most popular food joint. The only limitation he sees is ________.
- a)Advertising and Promotion
- b)High initial investment
- c)Limited Risks and Liability
- d)Speed of Growth
Correct answer is option 'B'. Can you explain this answer?
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Patil wants to start his business by taking a franchisee of McDonalds....
- Initial investment is the amount required to start a business or a project. It is also called initial investment outlay or simply initial outlay. It equals capital expenditures plus working capital requirement plus after-tax proceeds from assets disposed off or available for use elsewhere.
- Initial investment equals capital expenditures or fixed capital investment (such as machinery, tools, shipment and installation, more) plus a change in working capital, minus proceed from the sale old asset, plus tax adjusted profit or loss from the sale of assets.
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Patil wants to start his business by taking a franchisee of McDonalds....
High initial investment
Starting a franchise business, especially a well-established and popular brand like McDonald's, requires a significant amount of initial investment. This is the only limitation that Patil sees in his plan to take a franchisee of McDonald's. Let's discuss this limitation in detail.
1. Financial Commitment:
- McDonald's is a globally recognized brand with a strong reputation, which makes it an attractive choice for aspiring entrepreneurs like Patil. However, such popularity comes at a cost.
- The initial investment required to start a McDonald's franchise is quite high. The exact amount can vary depending on the location, size, and other factors, but it typically ranges from several hundred thousand dollars to over a million dollars.
- This investment includes expenses such as franchise fees, equipment purchases, real estate or lease costs, initial inventory, and working capital.
- Patil needs to have a substantial amount of capital or access to funding sources to meet these financial requirements. This can be a significant barrier for individuals who don't have access to such resources.
2. Return on Investment (ROI):
- While McDonald's is a well-established brand with a proven business model, success is not guaranteed. Patil needs to carefully evaluate the potential return on investment to ensure that the business will be profitable in the long run.
- The high initial investment means that it may take a considerable amount of time to recover the investment and start generating profits.
- Patil needs to assess the market conditions, competition, and potential customer base to estimate the revenue and profitability of the franchise. This requires a thorough understanding of the local market and consumer preferences.
3. Ongoing Expenses:
- Apart from the initial investment, Patil should also consider the ongoing expenses associated with running a McDonald's franchise.
- These expenses include royalty fees, advertising fees, lease or rent payments, employee wages, utilities, and maintenance costs.
- Patil needs to have a clear financial plan and ensure that the business generates enough revenue to cover these expenses and still generate a profit.
Conclusion:
While taking a franchisee of McDonald's can offer speedy growth opportunities, the high initial investment is the primary limitation that Patil sees in his plan. It requires a significant financial commitment and careful financial planning to ensure the success and profitability of the franchise. Patil needs to assess his financial capabilities and conduct thorough market research before making a final decision.
Starting a franchise business, especially a well-established and popular brand like McDonald's, requires a significant amount of initial investment. This is the only limitation that Patil sees in his plan to take a franchisee of McDonald's. Let's discuss this limitation in detail.
1. Financial Commitment:
- McDonald's is a globally recognized brand with a strong reputation, which makes it an attractive choice for aspiring entrepreneurs like Patil. However, such popularity comes at a cost.
- The initial investment required to start a McDonald's franchise is quite high. The exact amount can vary depending on the location, size, and other factors, but it typically ranges from several hundred thousand dollars to over a million dollars.
- This investment includes expenses such as franchise fees, equipment purchases, real estate or lease costs, initial inventory, and working capital.
- Patil needs to have a substantial amount of capital or access to funding sources to meet these financial requirements. This can be a significant barrier for individuals who don't have access to such resources.
2. Return on Investment (ROI):
- While McDonald's is a well-established brand with a proven business model, success is not guaranteed. Patil needs to carefully evaluate the potential return on investment to ensure that the business will be profitable in the long run.
- The high initial investment means that it may take a considerable amount of time to recover the investment and start generating profits.
- Patil needs to assess the market conditions, competition, and potential customer base to estimate the revenue and profitability of the franchise. This requires a thorough understanding of the local market and consumer preferences.
3. Ongoing Expenses:
- Apart from the initial investment, Patil should also consider the ongoing expenses associated with running a McDonald's franchise.
- These expenses include royalty fees, advertising fees, lease or rent payments, employee wages, utilities, and maintenance costs.
- Patil needs to have a clear financial plan and ensure that the business generates enough revenue to cover these expenses and still generate a profit.
Conclusion:
While taking a franchisee of McDonald's can offer speedy growth opportunities, the high initial investment is the primary limitation that Patil sees in his plan. It requires a significant financial commitment and careful financial planning to ensure the success and profitability of the franchise. Patil needs to assess his financial capabilities and conduct thorough market research before making a final decision.
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Patil wants to start his business by taking a franchisee of McDonalds. He is planning to take the franchisee with the aim of speedy growth. The only way he could think of if taking the franchisee and McDonalds is the most popular food joint. The only limitation he sees is ________.a)Advertising and Promotionb)High initial investmentc)Limited Risks and Liabilityd)Speed of Growth Correct answer is option 'B'. Can you explain this answer?
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Patil wants to start his business by taking a franchisee of McDonalds. He is planning to take the franchisee with the aim of speedy growth. The only way he could think of if taking the franchisee and McDonalds is the most popular food joint. The only limitation he sees is ________.a)Advertising and Promotionb)High initial investmentc)Limited Risks and Liabilityd)Speed of Growth Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Patil wants to start his business by taking a franchisee of McDonalds. He is planning to take the franchisee with the aim of speedy growth. The only way he could think of if taking the franchisee and McDonalds is the most popular food joint. The only limitation he sees is ________.a)Advertising and Promotionb)High initial investmentc)Limited Risks and Liabilityd)Speed of Growth Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Patil wants to start his business by taking a franchisee of McDonalds. He is planning to take the franchisee with the aim of speedy growth. The only way he could think of if taking the franchisee and McDonalds is the most popular food joint. The only limitation he sees is ________.a)Advertising and Promotionb)High initial investmentc)Limited Risks and Liabilityd)Speed of Growth Correct answer is option 'B'. Can you explain this answer?.
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