Franchise Quiz

Example Questions From the Test

• 1A franchisee wants to alter the store layout and create local packaging. What is the most appropriate first step?
  • Make both changes immediately because the franchisee owns the local business
  • Ask neighboring businesses whether the changes seem consistent with the area
  • Register the new packaging as a separate brand before informing the franchisor
  • Check the agreement and operating standards, then seek any required franchisor approval
• 2Which statement best distinguishes a franchisor from a franchisee?
  • The franchisor licenses its brand and system; the franchisee operates a business under that system.
  • The franchisor owns every outlet, while the franchisee manages one as an employee.
  • The franchisor supplies financing, while the franchisee supplies only labor.
  • The franchisor controls the local market, while the franchisee owns the brand trademarks.
• 3Two franchises charge similar initial fees, but one requires more equipment, inventory, and opening cash. Which figure gives the better starting comparison?
  • The estimated total initial investment, including required opening expenses and working capital
  • The initial franchise fee by itself
  • The franchisor’s total company revenue
  • The number of pages in each franchise agreement