Future Business Leaders of America (FBLA) Entrepreneurship Practice Test

What is a potential benefit of franchising for franchisees?

1. Access to an established brand.

2. Complete operational independence.

3. Lower initial investment compared to starting a business from scratch.

4. The ability to avoid all competition.

The correct answer is: Access to an established brand.

Access to an established brand is a significant benefit for franchisees. When a franchisee joins a franchise, they leverage the reputation, recognition, and marketing power of a well-known brand. This pre-established brand equity can lead to immediate customer trust and a higher likelihood of sales compared to launching a completely new, unknown brand. Franchisees do not have to invest time and resources into building a brand from the ground up, which can be a lengthy and uncertain process. Instead, they can focus on operating the business using the proven systems and methodologies provided by the franchisor, which often includes support in areas like training, marketing, and operational processes. The other options imply characteristics that are not aligned with the typical franchise model. For instance, complete operational independence is generally not possible within a franchise because franchisees must adhere to brand standards and practices mandated by the franchisor. Similarly, while some franchises may offer lower initial investment compared to crafting a fully new concept, this is not universally true across all franchises. Lastly, franchising does not allow a franchisee to avoid all competition, as they still operate in a competitive market, often alongside other franchise locations and independent businesses offering similar products or services.