Business Studies

What is a franchise? Types of franchise

len Alfred Ajibola - Sun, 24th May, 2020 @ 1:53 PM

Topics in Business Studies

What is an Office? Qualities of a good office layout Small office explained with its characteristics Large office: Characteristics of large office Advantages and disadvantages of small office Advantages and disadvantages of large office Advantages and Disadvantages of Corporations Advantages and Disadvantages of Limited Liability Company Advantages and Disadvantages of Partnership Credit card and Debit card explained with their similarities and differences Business Structure: What is a business structure? Advantages and Disadvantages of Franchise What is a franchise? Types of franchise Corporation explained with its types What is Limited Liability Company? What is Partnership Business? Types of Partnership What is business studies? Concept of business Elements of Management What is Management? Importance of Management Advantages and Disadvantages of Air Transport Advantages and Disadvantages of Rail Transport


Academic Questions in Business Studies

Please click here to see all Questions and Answers

A one-man business is termed _____.

  • A. Proprietorship

  • B. Sole Proprietorship

  • C. Individual Entrepreneurship

  • D. Sole Trader

  • E. All of the Above

  • F. None of the Above

Which of the following is not a function of the wholesaler?

  • A. They distribute goods

  • B. They store goods

  • C. Specialization of goods

  • D. They bring about price variability in goods

  • E. They act as shock absorbers during the movement of goods

  • F. Packaging of goods

A person employed by an organization to carry out the everyday duties of a typical office, and at the same time perform a couple of other functions for their company which may vary from one company to another, is termed a _____.

  • A. Secretary

  • B. Personal Assistant (P.A)

  • C. Secretary General

  • D. Clerical Staff

  • E. Supervisor

  • F. Bookkeeper

Dual Entry System - Len Academy

The above image best describes the _____.

  • A. Ledger system

  • B. Journal system

  • C. Double entry system

  • D. Balance sheet system

  • E. Principles of accounting system

  • F. Balanced accounting system

An accounting system focused primarily on a balanced debit and credit side is termed _____.

  • A. Ledger system

  • B. Journal system

  • C. Double entry system

  • D. Balance sheet system

  • E. Principle of accounting system

  • F. Balanced accounting system

With regards to money, which of the following statement is incorrect?

  • A. Money is crucial for the survival of every human being

  • B. Money is completely advantageous

  • C. Money is defined as anything that is generally accepted as a medium of exchange

  • D. Monopoly is said to exist when money and wealth exists in the hands of a few

  • E. Excess money in an economy can lead to inflation

  • F. When a person receives money that isn't commensurate with the job he or she had done, then that's underemployment

Which of the following statement is wrong with regards to business?

  • A. Business involves the exchange of something for another thing or money

  • B. Business is an economic activity

  • C. In business, profit goes beyond money

  • D. Businesses do not have social responsibilities to their customers

  • E. The exchange of services is an aspect of business

  • F. Businesses can be affected by government policies

Consumer _____ are the laws and methods put in place by various agencies so that consumers can enjoy maximum satisfaction on the goods they buy and services rendered to them.

  • A. Protection
  • B. Policy
  • C. Rights
  • D. Defence
  • E. Guide
  • F. Safety



What is a franchise?

Franchise is a business structure utilized by manufacturers, producers (or anyone rendering a service) in order to gain a larger reach in the distribution and sale of their products.

Please read on the concept of business structure and sole proprietorship here.


The establishment of a franchise requires an agreement between the parent company (called the franchisor) and another company, group or an individual (called the franchisee). The franchisee can only carry out related commercial activity on behalf of the franchisor after a franchise agreement had been reached.


As an instance, a parent company (franchisor) that produces drugs may require an individual or a group or another company (the franchisee) to become an official distributor for their product.

Please read the advantages and disadvantages of a franchise here here.

Note: A franchisee is an individual or company that has been liscensed to do business on behalf of another company called the franchisor.


The franchise business relationship is based on a legal contract and agreement between the franchisor and franchisee; and such business relationship is contained in the franchise agreement. To this end, The franchisee will have to purchase a franchise from the franchisor.

You can read on corporation as a business structure here.


Types of franchise relationship

There are various types of franchise relationship but we will consider three in this article. These are:


1. Single-unit franchise

The single-unit franchise is also referred to as a direct-unit franchise. Here, the franchisee invests its money by agreeing to operate the franchisor's product or brand in only one location.

The single-unit franchise is often considered as the oldest and simplest form of a franchise business structure, although it's still common to this day.

You can read on management and elements of management here.


2. Multi-unit franchise

The multi-unit franchise (also known as an area developer franchise) refers to a process whereby the franchisee operates the franchisor's product over different areas or locations at a specified period of time as contained in the franchise agreement between both parties.

The franchise agreement signed by the franchisee in a multi-unit franchise will include the franchisee agreement and developmental agreement. This agreement implies that the franchisee has a right to open multiple business locations within the specified area while the franchisor permits the franchisee to run its developmental schedule.

When a multi-unit franchisee fails to meet its developmental schedule, the franchisor may cancel the developmental agreement, thus keeping the area development fee (which is supposed to be paid in advance to the franchisee).

Please read on partnerships in business here.


3. Master franchise

The master franchise enjoys the privileges of a multi-unit franchise. In addition to having a right to operate the franchisor's product in different areas (multi-unit franchise), they also have the privilege to sell franchise to those seeking to become franchisee within the product's line. In this case, the master franchise becomes the franchisor in the area where they are present; and they collect a fee known as the unit franchise fee. They usually share this fee with their franchisor (parent company). However, the percentage for each fee may vary.

You can read on limited liability company here.


Note: The master franchise is required to sign the master franchise agreement, while also paying a fee called the master franchise fee to the franchisor.

In regards to the nature, terms and responsibilities comprising the master franchise agreement contract, it becomes the most complex of all the franchise relationships. In addition, a disclosure statement and franchise registration is required.

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Notable points in Business Studies

Consumer protection refers to the ways or methods through which consumers enjoy maximum satisfaction from the goods they buy and services rendered to them.

The agencies of consumer protection assists in protecting the consumer rights. These agencies may also be referred to as the organs of consumer protection. Basically, we have three of them, they are:

  1. Government Agencies

  2. Independent Agencies

  3. Legislation

Please read on consumer protection here

One of the responsibilities of the government of every nation is to set up agencies or organizations that will protect the interest of the consumers and invariably, the people.

Below are some of the government agencies of consumer protection:

  • National Drug Law Enforcement Agency (NDLEA)
  • National Agency for Food, Drug Administration and Control (NAFDAC)
  • Consumer Protection Council (CPC)
  • Rent Tribunal
  • Ministry of Health
  • Ministry of Commerce
  • Ministry of Transportation
  • Ministry of Environment
  • National Wages and Salaries Commission

Please read on the government agencies of consumer protection here