What Is Franchising?

According to this lesson, what is the primary reason a franchisor retains some control over operational decisions?

• The franchisor needs to protect their most valuable assets, their name and reputation.

• The franchisee is technically competing with the franchisor.

• They don't trust the franchisee to be successful.

• None of these are reasons discussed in the lesson.

According to this lesson, what is the definition of a franchise?

• A business strategy based on intimidating, as close as legally possible, a larger more successful company.

• A small business structure wherein the owner puts up their own capital and has complete control over all operational decisions.

• A business arrangement wherein an individual pays a larger company for the rights to use their name and general business plan.

• None of these statements accurately defines a franchise.

Which of the following is NOT an example of a franchise opportunity listed in this article?

• Dunkin' Donuts

• McDonald's

• Subway

• Apple

Which of the following best describes the relationship between the franchisor and franchisee?

• Business partners

• Customer/Vendor

• Direct competitors

• None of the answers listed describes the relationship between the franchisor and franchisee.

Which of the following fees are NOT associated with a franchise?

• Royalty

• Advertising Fee

• Franchise Fee

• Facility Fee

What can be a disadvantage associated with the use of a franchise?

• Proven business and system for franchisor

• Lack of flexible decision-making for franchisee

• Brand recognition for franchisor

• Turnkey operation for franchisee

Identify the hindrance to buying a franchise.

• Having to personally finance the building of the store

• Expensive licensing fees and start-up costs

• Strict laws

• Passing a difficult test

What could happen if a franchisee fails to conform to the franchise requirements?

• The franchisor will sell the franchise to another franchisee.

• The franchisee is sentenced by law.

• The franchisee will lose the franchise.

• The franchisor will double the royalty fee.

Which of the following best describes a franchise?

• A licensing arrangement between a company and another party licensing the use of the company name, products and processes

• A cheap turnkey operation where the owner has little responsibility

• A family owned business where the family agrees to pass its management down through the next generation

• A small business that has a special agreement with government to use any of the country's resources

What does a company like McDonald's want to ensure in each of its franchises?

• McDonald's wants each franchise to be a certain distance from the highway.

• McDonald's wants each franchise to be close to other fast food restaurants.

• McDonald's wants each franchise to have a play place.

• McDonald's wants its patrons to have a similar experience in every location.