Understanding Franchising: A Business Model Quiz

What is a franchise?

• A type of government grant

• A business model involving a franchisor and franchisee

• A specific type of tax benefit

• A legal agreement for employment

Who is considered a franchisor?

• A customer of a business

• A business with an established brand and business systems

• A person who supplies goods

• A government regulator

What does a franchisee pay to a franchisor?

• A one-time purchase price only

• Only a fixed monthly rent

• An initial fee and an ongoing share of profits

• A yearly subscription fee

Which company is noted as the most successful franchise globally?

• Skechers

• McDonald's

• Subway

• Starbucks

What is a major benefit of purchasing a franchise?

• Immediate large profits

• Avoiding all business risks

• Utilizing the franchisor's reputation and established systems

• Complete autonomy in business decisions

What type of support do franchisors typically provide to franchisees?

• Financial loans

• Legal assistance only

• Product development

• Training, support, and advice

What is the range of annual sales for a typical McDonald's franchise in the UK?

• Between 1.5 and 4.3 million pounds

• Between 5 and 10 million pounds

• Between 500,000 and 1 million pounds

• Between 100,000 and 500,000 pounds

What are the ongoing fees a McDonald's franchisee must pay?

• A one-time annual fee

• A quarterly performance fee

• A percentage of net sales and a contribution to the marketing fund

• A fixed fee only

What can a McDonald's franchisee not change?

• The product range, pricing, and advertising

• The interior design of the restaurant

• The name of the restaurant

• The location of the restaurant

What is a drawback of purchasing a franchise compared to starting your own business?

• Higher initial investment and loss of some profits through fees

• Less legal paperwork

• Faster setup time

• More business flexibility