FRANCHISING (PRELIM EXAM)

the regular payment made by the franchisee to the franchisor, usually based on the percentage of the franchisee's gross sales

The __________________ acts as a franchisor within the territory using the franchisor's systems and trademarks.

• unit franchisee

• area franchisee

• master franchisee

• lone franchisee

Types of Franchisee Agreement (Choose 3)

• business format franchise

• single unit franchise

• multi unit franchise

• master franchise

A type of franchise in which the product, method of distribution, sales and management procedures are highly controlled.

• product distribution franchise

• area development franchise

• business format franchise

A franchise is the license or agreement between two legally independent

parties which gives: (CHOOSE 4)

• A person or group of people (franchisee) the right to market a product or

  service using the trademark or trade name of another business (franchisor).

• The franchisee the right to market a product or service using the operating

  methods of the franchisor.

• The franchisee the obligation to pay the franchisor fees for these rights.

• The franchisor the obligation to provide support and rights to franchisees.

• The franchisor the obligation to provide financial support to franchisees.

A method of business expansion characterized by a trademark license, payment of fees, and significant

assistance and/or control.

A license that describes the relationship between the franchisor and franchisee including use of trademarks,

fees, support and control.

ADVANTAGES OF OWNING A FRANCHISE (CHOOSE 3)

• A franchise increases your chances of business success because you are associating with proven products and

  methods.

• “Owning a franchise allows you to go into business for yourself, but not by yourself.”

• A franchise provides an established product or service which already enjoys widespread brand name recognition.

  This gives the franchisee the benefits of customer awareness which would ordinarily take years to establish.

• Franchisees must be careful to balance restrictions and support provided by the franchisor with their own ability

  to manage their business.

Franchises offer important pre-opening support: (CHOOSE 4)

• SITE SELECTION

• DESIGN AND CONSTRUCTION

• TRAINING

• GRAND OPENING PROGRAM

• NATIONAL AND REGIONAL ADVERTISING

The purpose of the franchise agreement is to give prospective franchisees with information about the franchisor, the franchise system and the agreements they will need to sign so that they can make an informed decision.

• TRUE

• FALSE