Question

Joseph runs a popular cafeteria chain. He currently has three branches in the city. He plans to enter a franchise contract with another business. Joseph, the franchisor, plans to allow the franchisee to use the cafeteria’s logo and trademark. Further, Joseph plans to provide training to the franchisee’s staff to make sure that it provides the kind of customer service that the cafeteria is famous for. Joseph is going to help the franchisee understand the specific work processes and management techniques of his business. As a franchisor, Joseph will also be providing legal support to the franchisee. Which franchise model does Joseph’s business plan follow?
A. management franchise

B. business format franchise

C. trademark franchise

D. product distribution franchise

Answer 1

Answer:

B. business format franchise

Explanation:

Under the business format model, the franchisee adopts the entire business operating systems of the franchisor. It means that the franchisee uses the franchisor's trademark, plans, and procedures. Goods and services offered by the franchisee will be identical and will bear the same prices as those of the franchisor.

Joseph plans to operate a business format model of a franchise. The franchisee will have to meet Joseph's standards of operations. For that to happen, Joseph must provide the following.

1. Initial training
2. Standardize build-out plans
3. Operations manuals
4. Continuous support
5. Point-of-sale system education
6. Key functionalities

Joseph has a responsibility to ensure the franchisee adhere to the standards agreement. It means he will have a supervisory role in management for the franchisee.

In return, Joseph will be earning commissions from each franchisee based on the income of each of them.