4/29/23, 12:21 PM FRANCHISING (PRELIM EXAM)

NAME :
CLASS :
FRANCHISING (PRELIM EXAM)
20 Questions DATE :

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

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

A master franchisee B lone franchisee

C area franchisee D unit franchisee

3. Types of Franchisee Agreement (Choose 3)

A multi unit franchise B business format franchise

C single unit franchise D master franchise

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

A area development franchise B business format franchise

C product distribution franchise

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4/29/23, 12:21 PM FRANCHISING (PRELIM EXAM)

5. A franchise is the license or agreement between two legally independent

parties which gives: (CHOOSE 4)

A person or group service using the

of people trademark or trade
The franchisor the obligation to provide
A B (franchisee) the name of another
financial support to franchisees.
right to market a business
product or (franchisor).

The franchisee the obligation to pay the The franchisor the obligation to provide
C D
franchisor fees for these rights. support and rights to franchisees.

The franchisee the right to methods

E market a product or service of the
using the operating franchisor.

6. A method of business expansion characterized by a trademark license, payment of fees,

and significant
assistance and/or control.

7. A license that describes the relationship between the franchisor and franchisee including
use of trademarks,
fees, support and control.

8. ADVANTAGES OF OWNING A FRANCHISE (CHOOSE 3)

This gives the

A franchise provides franchisee the
Franchisees must be careful to to an established benefits of
balance restrictions and manage product or service customer
A B
support provided by the their which already enjoys awareness which
franchisor with their own ability business. widespread brand would ordinarily
name recognition. take years to
establish.

A franchise increases your

“Owning a franchise allows you to go into
C business for yourself, but not by
yourself.”
chances of business success
D methods.
because you are associating
with proven products and

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4/29/23, 12:21 PM FRANCHISING (PRELIM EXAM)

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

A TRAINING B SITE SELECTION

C GRAND OPENING PROGRAM D DESIGN AND CONSTRUCTION

E NATIONAL AND REGIONAL ADVERTISING

10. 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.

A TRUE B FALSE

11. ADVANTAGES OF STARTING A NEW BUSINESS (CHOOSE 3)

A Usually lower start-up cost B Requires more time andenergy

No inherited problems existing

C D Freedom with location andprocedures
from an business

12. __________________ is an option that many people looking to manage their own small
business should consider, as
there are a number of advantages to joining this industry.

A BUYING A FRANCHISE B BUYING AN EXISTING FRANCHISE

C STARTING A NEW BUSINESS

13. In this section of the franchise agreement, the duration of the agreement is specified.

14. This section OF THE FRANCHISE AGREEMENT lists the trademarks, service marks or logos
the franchisee is entitled to use.

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4/29/23, 12:21 PM FRANCHISING (PRELIM EXAM)

15. Restriction on goods and services offered: This section describes any restrictions placed
on the goods or services
offered, including: (CHOOSE 4)

A approved advertising B Hours of operation and pricing

C required quality standards D Approved suppliers

Requirements for keeping and

E
submitting adequate records

16. ______________________________ are the track record of the franchise.

17. Only 20 to 25 percent of

all franchisors provide
prospective franchisees with
information about earnings
claims.

A TRUE B FALSE

18. The franchise agreement is more specific than the UFOC about the terms of the
relationship between the
franchisee and franchisor.

A TRUE B FALSE

19. Before buying any business, carefully consider many factors that are critical to success:
costs, training and
support, abilities, franchisor’s experience, demand and competition, expansion plans.

A TRUE B FALSE

20. There are three options to begin a business, start a new business, buy an existing
franchise, and buy a an existing business.

A false B true

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