Franchise Fundamentals: Put Your Knowledge to the Test in This Quiz

Buying a Franchise

Welcome to the “What You Need to Know about Buying a Franchise” Quiz!

This quiz will test your knowledge about buying a franchise. Are you ready to put your knowledge to the test?

1 / 10

1. What is a franchise?

A quick service restaurant business

A business model where a company licenses its name and business model to another person or entity

A type of legal entity

All of the above

2 / 10

2. What are the benefits of buying a franchise?

Limits your liability

You have access to an established brand and business model

You get an exclusive geography where you can define the rules for your location

You get marketing assistance and can set your own prices

3 / 10

3. What is the difference between a franchise and an independent business?

Franchises have more control over their business model

Franchises pay less in taxes

Independent businesses have more control over their business model

Independent businesses pay less in taxes

4 / 10

4. What fees do franchisees typically have to pay?

Initial franchise fee and ongoing royalty fees

An annual licensing fee and marketing fees

A share of the franchisor’s legal fees and accounting fees

Equipment rental fees and payroll fees

5 / 10

5. What is the role of the franchisor in a franchise agreement?

To provide funding for the franchisee

To manage the franchise on behalf of the franchisee

To provide ongoing support and guidance to the franchisee

To set the franchisee’s prices and profits

6 / 10

6. What is a franchise disclosure document?

A document that outlines the terms of a franchise agreement

A document that lists the franchisee’s responsibilities

A document that outlines the franchisor’s financial obligations to the franchisee

A document that outlines the franchisee’s intended marketing plan

7 / 10

7. What is a territory in a franchise agreement?

A designated area where the franchisee can operate

A designated area where the franchisor can operate

A designated area where the franchisee cannot operate

A designated area where the franchisor cannot operate

8 / 10

8. What is a training program in a franchise agreement?

A program that trains the franchisee on the business model and operations

A program that trains the franchisor on the franchisee’s market

A program that trains the franchisee on legal matters

A program that trains the franchisor on accounting matters

9 / 10

9. What is/are the financial minimum threshold(s) that franchisors use to determine franchisee suitability?

Net Worth

Liquid Assets

Credit Score

All of the above

10 / 10

10. What is Discovery Day?

A meeting with another franchisee to explore their operations and see how the franchise operates.

A day when you review all the franchise documentation with the franchisor, such as the Franchise Disclosure Document (FDD)

A meeting with the franchisor’s team at their headquarters

A day when you meet with your franchise broker to get all your questions answered

Your score is

The average score is 60%

Franchise Fundamentals: Put Your Knowledge to the Test in This Quiz

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