Test Your Franchise IQ

Franchise Trade:

Would you know the difference between franchise ‘fact’ and franchise ‘fiction’? Could you spot a franchise misconception or myth if you saw one? Just how knowledgeable are you about the world of franchising?

Take our ‘true’ or ‘false’ franchise quiz and find out just how ‘franchise-savvy’ you really are.

True or False?
1. Franchising is a business system whereby a franchisor sells trademarks and other methods of doing business to a franchisee in exchange for franchise fees.

2. When people think of franchising, they often think of McDonald’s. This restaurant chain was the first franchised restaurant in the U.S. to become a big franchising success.

3. Franchise operations today account for nearly 30% of U.S. retail sales.

4. Certain items in a franchise agreement may be negotiable.

5. According to the FTC (Federal Trade Commission) Franchise Rule, franchisors at contract renewal must honor and continue the terms and conditions of the original franchise agreement.

6. When assessing franchisors in the same industry, you may find greater success with the franchisor that has fewer franchises in its chain.

7. In franchising, the two primary legal documents are the disclosure document - typically in the form of the Uniform Franchise Offering Circular (UFOC) - and the franchise agreement.

8. The purpose of the UFOC is to provide prospective franchisees with enough information about the franchisor, its system and agreements so they can analyze the merits of a potential franchisor and make an informed decision.

9. Overcapitalization is one of the top reasons new franchisees fail.

10. Franchisors are generally looking for franchise candidates who have specific skills and experience in their industry.

11. The Small Business Administration (SBA) lends money to small business owners, including franchisees.

12. Every franchise system is basically set up the same.

13. In order to purchase a franchise, a franchisee will most likely need to come up with about 30 percent of the total investment needed to start the business.

14. The truth about franchising is that most franchisees do not ‘get rich’ and usually work long hours, especially the first year.

15. There are hundreds of franchises that costs $50,000 or less.

Go for the answers…