Franchises
AQA GCSE Business Studies revision on Franchises. Aligned to the AQA GCSE Business 8132 specification. This bank has 10 practice questions on this topic.
Sample questions (3 of 10)
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Question 1
What is the name of the business entity that grants the right to trade under its brand name in a franchise agreement?
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Answer: Franchisor
A franchisor owns the intellectual property, brand identity, and operating systems of the business. They grant the franchisee permission to use these assets in exchange for initial fees and ongoing royalties.
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Question 2
Which of the following is a primary disadvantage for a franchisee?
- A) Access to national marketing campaigns
- B) Ongoing royalty payments to the franchisor
- C) Reduced risk of business failure
- D) Established brand recognition
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Answer: Ongoing royalty payments to the franchisor
While royalties provide access to the franchisor's support, they represent a significant fixed cost for the franchisee. This reduces the net profit retained by the business owner compared to operating an independent firm.
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Question 3
If a franchisee pays an initial fee of 15000 pounds and a monthly royalty of 5 percent of sales, calculate the total cost to the franchisee in the first year if annual sales are 200000 pounds.
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Answer: 25000
To calculate this, find 5 percent of 200000, which is 10000. Add this to the initial franchise fee of 15000 to reach the total cost of 25000 pounds.
Want to test yourself on the remaining cards for this topic?
7 more questions on Franchises — plus mistakes tracking and spaced repetition across the whole Business Studies spec.