Franchise Ownership Quiz

If you are buying an existing business, you should ask the current owner for important information in written form.

• True

• False

Fewer than 100,000 people in the United States own franchises, and the popularity of franchise ownership is declining rapidly.

• True

• False

Initial franchise fees are usually refundable if the franchise owner later decides to go into another line of business.

• True

• False

State and federal laws require that the franchisor provide the Franchise Disclosure Document (FDD) to prospective franchisees 14 days before the franchisee signs a contract.

• True

• False

Comparing franchises is a good idea because some franchisors help buyers with marketing, merchandising, and site selection.

• True

• False

According to some estimates, as many as 90 percent of all businesses, including the vast majority of small- and medium-sized companies, are owned by families.

• True

• False

Starting your own new business offers a low level of risk because you depend on your own business talents.

• True

• False

Income earned by a sole proprietorship is taxed twice: once as company income and again as individual income.

• True

• False

Antitrust laws make monopolies in certain industries illegal; they also ban other types of business activities that do not promote competition.

• True

• False

The Federal Bureau of Investigation is the government agency that monitors activities such as false or misleading advertising and price setting by competitors.

• True

• False