Quiz 36: Small Businesses and Franchises


There are many benefits to a franchisor-franchisee relationship. The franchisee receives the benefit of the name, trademark and reputation of the franchisor, but can operate as an almost independent business. As a franchisee, brand awareness can help generate profits and get a business of the ground more quickly than a sole proprietorship. However, as a franchisee, one has less ultimate control over things like business premises, location, business organization, quality control and pricing arrangements. However, franchisor support in the form of trainings, infrastructure help, and technical support can outweigh those slight restrictions.

The franchisee is, a chain style business operation , under which a franchisee works under a franchisor's trade name and is recognized as a member of a select strata of dealers that involve in the franchisor's business. The franchisee is usually obligated to ensue uniform or rearranged method of operation. Certain standards of performance are required to be met by the franchisee. Example: A classic example is that of KFCs and Mc Donalds

Most likely, the court will find NF vicariously liable for the actions of their manager, because their manager has an agent relationship with his employer, NF. An agency relationship can be extrapolated from the facts regarding those involved and the amount of control exercised by NF over their franchisees. Here, NF had substantial control over everything from new hires to policies to termination.

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