Franchise Tutorials Quizzes

1. One of the fundamental principles of franchising is:

2. Franchising only exists in the fast food industry.

3. Franchise fees are typically paid:

4. A royalty ensures that the franchisor has a vested interest in your success. Your success results in their success.

5. Deposit agreements:

6. Deposits are non-refundable.

7. Franchise systems are currently required by law to provide Disclosure Documents in:

8. The Disclosure Document is only a summary of important information and is not a legal agreement.

9. A franchisor uses royalty fees to:

10. Royalty amounts are the same for every franchise system.

11. Advertising fees range from:

12. Advertising fees are not considered income of the franchisor.

13. During initial training, new franchisees must:

14. Costs for flights, accommodation, and meals are always covered by the franchise system.

15. Ongoing training updates franchisees and their staff on:

16. You may only receive ongoing training from your franchisor, not other educational sources.

17. Operation manuals are:

18. An operation manual cannot be changed or added to.

19. In order for the Franchisee Advisory Council to be effective:

20. A Franchisee Advisory Council can be an important part of a franchise system.

21. The amount of inventory that franchisees are required to carry will:

22. It's good practice to insure the entire inventory.

23. Franchisors will regularly monitor approved suppliers through:

24. In general, most Canadian franchisors use suppliers based in the US.

25. Proper insurance allows you to recover from a financial loss during the occurrence of a specific event such as:

26. All insurance needs are the same for all franchised businesses.

27. Most franchise agreements will clearly state:

28. As a franchisee, your employees work for you and not the franchisor.

29. If you choose not to renew your franchise agreement:

30. Upon renewal, your new franchise agreement may be substantially different from the original.

31. Renewing your franchise agreement might require updates to:

32. You and your staff might have to upgrade your training when you renew your franchise agreement.

33. Territorial boundaries are defined in the franchise agreement and will often state that:

34. Specific territory and protected area policies and terms should be outlined in the franchise agreement.

35. The Master Franchisee Agreement provides the master franchisee with:

36. Multi-unit, area development, or master franchisee agreements are similar in that they provide the licensee with the ability to generate revenues from multiple locations.

37. Total occupancy costs for a leased space can include:

38. In a head lease, the franchisee is in a direct contractual agreement with the landlord.

39. Leasehold improvements:

40. It always ends up being cheaper for a franchisee to lease a space with pre-existing leasehold improvements.

41. There are benefits to regular franchisee reporting. They include:

42. Franchisors require regular reporting from their franchisees because it is in everyone’s best interests to be aware of what is happening throughout the franchise system.

43. The franchisor may also carry out operational audits on its location. Things that may be looked at during an operational audit include:

44. Periodic audits, both financial and operational, play an important role in the success of any franchise system.

45. The costs involved in mediation, arbitration, or a court case are paid for by:

46. Going to court is the fastest and cheapest way to resolve franchisee-franchisor disputes.

47. A default is:

48. Franchise relationships can come to an end for a variety of reasons.

1. From a franchisee perspective, franchising benefits by:

2. Franchisors often don't welcome franchisee input.

3. Ongoing royalty fees will vary from:

4. An advertising fund is a government funding program to assist franchisors in developing advertising materials.

5. From a potential franchisee perspective, deposits benefit by:

6. There are no provincial legislations regulating franchise deposits.

7. Disclosure Documents are provided to potential franchisees:

8. The Disclosure Document will typically include a list of existing franchisees, with contact information.

9. Royalties are often calculated based on:

10. The benefits of royalty fees do not outweigh the costs.

11. Advertising fees are calculated based on:

12. Franchisees cannot request financial statements on how advertising fee dollars are spent.

13. Initial training provides a franchisee with:

14. As franchising is a business model, initial training is the same for every franchise system.

15. There's often a correlation between the quality and thoroughness of ongoing training and:

16. Ongoing training is also provided via Internet and video.

17. A good set of operation manuals will:

18. Operation manuals are typically not considered an obligation of the franchisor.

19. A Franchisee Advisory Council is:

20. Only top-performing franchisees are permitted to serve on Franchise Advisory Councils.

21. The franchisor will usually have clearly defined policies regarding what products can be carried and:

22. A strong franchise will often allow franchisees to purchase inventory at a lower cost than if they were an independent business.

23. A strong franchise system will use approved suppliers to:

24. Franchise systems will often permit franchisees to introduce new suppliers for review.

25. Typically in a franchise agreement, or within the operation manual, there will be specific insurance requirements that you are obligated to have, including:

26. A group plan with the franchise system is significantly lower in cost compared to individual coverage.

27. The cost of employees goes beyond the paycheque. Some other costs are:

28. Provincial Human Rights Codes prevent employers from discrimination when hiring and managing employees.

29. You should give notice of your intent to renew your franchise agreement:

30. The length of the Term of Agreement is always 10 years.

31. The cost associated with renewing your franchise agreement:

32. Some franchisors offer assistance or set a cap for the cost of these changes.

33. The right of first refusal means:

34. When exploring the possibility of opening a second location near a protected territory, the franchisor will usually conduct a study to determine the potential impact on sales of the existing location.

35. An area developer is a franchisee who:

36. A multi-unit franchisee must have the ability to work in the business rather than on the business by working in multiple locations at the same time.

37. In a sublease arrangement, the franchisee:

38. No matter which type of leasing arrangement is chosen, the franchisee should fully understand his or her legal and financial obligations as outlined in the lease agreement.

39. When building out a new franchise location, a franchisee should:

40. During build out of a new location, the franchisor will usually have the final decision on all aspects of the build, especially those relating to brand consistency.

41. Most franchise agreements require franchisees to submit regular reports. These reports are usually:

42. Franchisees are usually also required to submit reports and documentation to the government. What are some of these submissions?

43. An audit is generally performed by a franchisor when a franchisee:

44. When a franchisor conducts a financial audit on a franchisee, there is no allowance made for errors in accounting/reporting.

45. The first method of dispute resolution a franchisee or franchisor should explore is:

46. Mediation is a non-binding process, while the results of arbitration are binding.

47. When selling your business and transferring the licence to a new franchisee:

48. If your franchise agreement is terminated, you can open a competing business next door right away.