Franchising

True or False

Write True if the statement is correct and write False if the Statement is wrong.

1) For a territory concerns, the geographical issue must be clear for the franchisee in order to protect his right against territorial disputes. *

2) Stocks market is an example of a secondary market. *

3) A transfer fee can be negotiable, especially if you're buying a troubled franchise. The franchisor may grant some flexibility especially in this kind of case. *

4) For capital sourcing, writing a business plan for a franchise business will help you pitch to investors. *

5) For the franchisor litigation-it could serve as a red flag for a new partner/ franchisee. *

6) In an Area Development Agreement where an area developer agrees to operate franchises in a designated area and pay a development fee in return for non-exclusive rights to develop units in that area. *

7) A royalty fees are typically calculated as a percentage of the weekly or monthly gross sales, and they may be payable weekly, monthly or quarterly over the life of the franchise agreement. They are so called initial fees. *

8) An Advertising fees is used to promote the franchise system as a whole rather than just your location. advertising fees may be calculated as a percentage of your store's gross or net sales, or they ma be a fixed monthly amount. This may be an on going fees. *

9) In a franchising business, the franchisee is not given freedom to run his business, because the whole franchise is run and controlled by the franchisor, *

10) In a Master Franchise Agreement the franchisor grants the right to franchisees to others in a designated geographical territory. *

11) To buy an Existing Franchise is the strongest advantage of an existing franchise business because you have a chance to examine its performance in numbers. *

12) A short-term debt-based financial instruments could last for a minimum of one year to two years. *

13) In discovery day, the new franchisee is allowed to take part and observe the actual operation of the business, even participate in the decision making. *

14) For validation purposes, the new recruited franchisee is not encourage to talk and get some pertinent information among the other franchisee. *

15) A franchise agreement grants a franchisee the exclusive right to operate a franchise business pursuant to the terms of franchise agreement. *

16) Franchising is govern by the IPC code section 87 and 88 are intended to prevent unfair competition and trade. The prohibited provisions are deemed prima facie to have an adverse effect on competition and trade. *

17) To be legally entitled to sell franchises, the franchisor will need to develop a franchise agreement and an FDD (Franchise Disclosure Document).which discloses all the information regarding the actual operation of the business to be franchised is optional. *

18) Special laws on Foreign Investments act set out restrictions and prohibitions on foreign investors in relation to the sectors they can invest in and how much they can invest. *

19) For hiring and selection of employee for a franchise business, it is the franchisors decision whom to hire and be an employee for that particular business. *

20) Advertising and promotions are all activities made by franchisor and the only participation of the franchisee is the allotted advertising fee charge to them regularly. *

21) A franchise fee is the payment made by a franchisee for the right to use the company's brand, products, and intellectual property. This can be limited to an up front or on an going basis according to the terms of the franchise agreement. *

22) To ensure successful franchisees and maintain quality control, the franchisor will need to develop a state-of-the-art operations manual for its franchisees. *