CFE Franchisee Relations & Support Flashcards
6 cards from real CFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CFE Franchisee Relations & Support flashcards as text
What is the significance of 'royalty' in a franchise relationship?
Answer: An ongoing fee paid to the franchisor, typically a percentage of gross sales, for continued use of the system
Royalties are the primary ongoing revenue stream for franchisors and fund the support, training, and innovation franchisees rely on.
A franchise system's 'Brand Fund' or 'National Marketing Fund' is primarily used to:
Answer: Collectively pool franchisee contributions for system-wide marketing campaigns and brand-building
The national marketing fund aggregates contributions from all franchisees and company stores to fund advertising, digital marketing, and brand awareness at scale.
What is a 'default and cure' provision in a franchise agreement?
Answer: A process giving franchisees a specified period to correct a contract violation before termination
Default and cure provisions protect franchisees by requiring the franchisor to notify them of violations and provide an opportunity to remedy the issue before termination is pursued.
Which support activity is MOST effective at improving underperforming franchisee unit economics?
Answer: Targeted one-on-one business coaching with actionable performance improvement plans
Personalized coaching that diagnoses the root causes of underperformance and creates structured improvement plans addresses specific operational and financial gaps.
What is a 'franchise renewal' and what must typically occur for it to be granted?
Answer: The franchisee meets performance standards, upgrades to current brand requirements, and signs the then-current agreement
Renewal requires the franchisee to demonstrate satisfactory performance, pay a renewal fee, and sign the then-current agreement which may differ significantly from the original.
In franchise relations, what does 'co-branding' refer to?
Answer: Operating two complementary franchise brands within the same location or under the same franchisee agreement
Co-branding allows franchisees to operate two compatible brands in one location, increasing revenue per square foot and customer traffic.