CFE CFE Franchise Development & Expansion 2

Question 1

A franchisor is considering expanding internationally. What is the most common entry strategy that involves partnering with a local entity to develop multiple units in a country?

Accepted Answer

Master franchise agreement

Answer

Direct franchising

Answer

Joint venture

Answer

Company-owned expansion

Question 2

Which of the following best describes a 'franchise resale' or 'transfer'?

Accepted Answer

An existing franchisee selling their unit to a new owner with franchisor approval

Answer

A franchisor selling its brand to a competitor

Answer

The franchisor repurchasing underperforming units

Answer

Converting a company-owned unit to a franchise

Question 3

What is the key distinction between a 'single-unit franchise agreement' and an 'area development agreement'?

Accepted Answer

Area development grants rights to open multiple units on a schedule

Answer

Area development requires a larger royalty

Answer

Single-unit agreements last longer

Answer

Area development eliminates territory protection

Question 4

When evaluating a candidate franchise market, which analysis method divides a trade area by demographic, psychographic, and competitive factors?

Accepted Answer

GIS-based trade area analysis

Answer

SWOT analysis

Answer

Site selection matrix

Answer

Break-even analysis

Question 5

In franchise development, what does 'validation' refer to in the prospect's discovery process?

Accepted Answer

Prospects contacting existing franchisees to verify franchisor claims and culture

Answer

The FDD compliance review

Answer

The franchisor's financial audit

Answer

Legal review of the franchise agreement

Question 6

Which FDD item contains audited financial statements of the franchisor?

Accepted Answer

Item 21

Answer

Item 19

Answer

Item 20

Answer

Item 22

A franchisor is considering expanding internationally.What is the most common entry strategy that involves partnering with a local entity to develop multiple units in a country?

A franchisor is considering expanding internationally.
What is the most common entry strategy that involves partnering with a local entity to develop multiple units in a country?