Sample Test : Franchise

Part One  Interview

1）          Do you know any franchise organization? Can you name one?

---Yes, I know some. MacDonald’s/Kentucky Fried Chicken /Holiday Inn is a well-know franchise organization

2)     Why do you think people open a franchised business

–Because franchising enables many people to both own a business and get help running it

--Franchisees do not have to develop a new product, create a new company, or test the market

--Franchising offers business firms of all sizes a way to grow with minimum investment

3) Why do you think companies franchise

–Because franchisors don’t have to spend money to open franchises, On the contrary, people pay them to open it. It’s immediately profitable.

   --Some companies use franchising to build business quickly to avoid losing a promising new market to other firms.

4) Are there any disadvantage of owning a franchised business?( why ? why not)

–Yes. Franchisees have to pay franchise fees.

   --Yes, Franchisees lose some independence.

   --Yes, In some cases, the training program provided by franchisors are weak—too brief and staffed by trainers who do not have instructional skills.

Part Two : Mini-presentation

What is important when….?

Entering a franchising agreement

l       Brand name

l       Training

Suggest Answer

   I think the first important thing is to make sure that the company with which a person wishes to enter a franchising agreement has a big brand name, because this is the biggest benefit of owning a franchised business, for a franchisees can use the well-recognized brand name to make profit. After all, the purpose of entering business is to earn money.

  Second, I think the franchisor should provide necessary training programs which should include managerial skills to the franchisee. And the franchisee must ensure that the training programs should be satisfactory. Without successful training programs, it will be very difficult for the franchisee to run the business, and of course, it will be less likely for the franchisee to make money.

  Third, I think the person who wishes to enter a franchising agreement should have the minimum amount of money needed for opening a franchised business. Because there will be various costs including the franchisee fee and opening costs, equipment payment, and things etc.

Part three: Collaborative task and discussion

       Entering a Franchise Agreement

   A prospective investor is planning to enter a franchise agreement. You have been asked by him to give some advice on this. Discuss the situation together, and decide:

 What kinds of information you should look into

 What forms of support a franchisor should provide.

Suggested Answer

A: when you are deciding whether to enter a franchise agreement, I think it’s important that we should first evaluate the opportunity.

B: Yes, I’m with you on that. It won’t do to jump to any opportunity of a franchised business. In order to be discreet, we’d better look into some of the franchise firm’s information, like its financial statement, because it can show whether the franchise firm is making profits or not, in other words, whether the firm is doing well or poorly.

A: That’s true. And I think we should also look into the franchise fee: how much does the firm charge to the buyer? Is the fee too high compared to other franchise firms?

B: Besides, don’t forget to look into the firm’s history. We should learn how the franchise firm has developed, and whether the firm has a bright future.

A: Another thing which is very important is to see whether the franchise firm has a nationally or regionally well-known brand name. Otherwise, it’s meaningless to enter a franchise agreement.

B: In addition, we should also look into the investment requirements to see whether the prospective investor can meet these requirements.

A: Now, let’s look at what forms of support a franchise firm should provide.

B: The franchise firm should provide training programs because the prospective investor may lack managerial skills.

A: And the training should be delivered well and not too brief.

B: It’s quite true, the franchisor should provide guidance in running the business.

A: And the franchise firm should allow the prospective investor to use its product or service.

B: Apart form these, the franchise firm should help the prospective franchisee to seize (catch; grasp; grab:抓住)financial assistance if he or she has limited funds.

Follow-up Questions

(1)  what kind of franchised Business will you enter.(Why)

I think I will choose catering sector, because there are a lot of well-recognized fast food restaurants. I can use their brand names, which will make it easier to earn money,

I will choose a clothing g company, there is always a big market tin clothing sector w\which will make your business profitable.

(2)  what do you like to be, a sole proprietor or a franchisee (Why)

I prefer to be a sole proprietor, because as a sole proprietor, you are independent, you are your own boss. While as a franchisee, your promotional activities, financial records, hiring, service procedure, etc, are not in complete control of your own.

I prefer to be a franchisee, because as a franchisee, you don’t need to open a new company, create a new product, and test the market.

(3)  What do you think is the most attractive thing for a franchisee?

The training offered by the franchisor. This is the most valuable thing in opening a franchise. You learn the first-class managerial skills in the training program.

I think, it is the use of the well-recognized product or service. You don’t need to spend a lot of money to develop a product and test it. The proven product is right there for you to use and make money from it.

(4)  Do you think franchise opportunities exist in every type if business ? ( Why /why not )

Yes, franchise opportunities touch every type of business: fast food, variety stores, repairs shops, dry-cleaning services, pet shops etc, just to name a few.

(5)  In which type of business is franchising popular? ( why /Why not )

Fast food. Numerous fast-food outlets can be seen in shooing malls.