Avenues of Acquiring a Business is one of 9 topics in the Grade 11 Business Studies CAPS syllabus, covered across 3 lessons on Study Vault. Below are real practice questions from this topic with full worked answers.
Sample practice questions
Easy
1. In a franchise arrangement, the business that grants the right to operate under its brand is called the:
Franchisor
Franchisee
Lessor
Lessee
Answer: Franchisor — The franchisor is the established business that grants another party (the franchisee) the right to operate using its brand, systems and support.
Easy
2. What are ongoing payments a franchisee typically pays for continued use of the franchisor's brand and systems called?
Royalties
Dividends
Premiums
Wages
Answer: Royalties — Royalties are ongoing payments, usually a percentage of turnover, paid by a franchisee for continued use of the franchisor's brand, systems and support.
Medium
3. What is the main advantage of franchising for a franchisee, relating to risk?
Answer: Access to a proven, already-successful business model, reducing risk — Franchising gives a franchisee access to a proven, already-successful business model and established brand, significantly reducing risk compared to starting an unbranded business from scratch.
