To be able to identify the possible area in which conflict of interest may occur during any transaction. Assessment Task You are interested in starting a business by buying into a home-grown (Malaysia) franchise system. In order to become a franchisee you need to invest a certain sum of money as initial fee and also to paythe franchisor monthly royalty base on the percentage offgross sales. The evaluation ofthe franchise opportunity is divided into two parts; the financial as we I as the non-financial aspects. The inancial evaluation is similarto the capital budgeting process. However the non-financial aspect is filled with potential conflict of interests between the two parties.
Required: What are some ofthe difficulties you will encounter in evaluating the franchise investment?
Need minimum 8 points. Assessment Criteria Able to present ideas and facts in a logical manner. Demonstrate evidence of an understanding ofthe subject matter.