DECA+ Business Management and Administration Practice Exam

What characterizes a business-format franchise?

1. A significant level of independence for the franchisee

2. A close, continuous working relationship between the franchisor and franchisee

3. High startup costs and minimal support

4. A focus on local market domination

The correct answer is: A close, continuous working relationship between the franchisor and franchisee

A business-format franchise is characterized by a close, continuous working relationship between the franchisor and franchisee. This type of franchise generally involves a well-defined system of operations that the franchisee must follow, which includes not only branding and marketing strategies but also training and ongoing support from the franchisor. The franchisor typically provides an entire business model, including operational procedures, marketing plans, and customer service guidelines, ensuring consistency across all locations and facilitating the franchisee's success. This model means that franchisees benefit from the established reputation and support of the franchisor, leading to a more structured and cohesive business environment. The close relationship enables the franchisee to receive ongoing training, marketing assistance, and operational support, which helps them uphold the franchise brand's standards and drive business growth. In contrast, the other options do not accurately define a business-format franchise. The level of independence for the franchisee is generally limited, as they must adhere to the franchisor's systems and standards. High startup costs can vary, but minimal support is typically not a characteristic of business-format franchises, as extensive support is a hallmark of this model. Additionally, while focusing on local markets can be relevant, a defining feature of business-format franchises is not just local domination but also a