Name: Kristine Jubahib

Name: Kristine Jubahib

Course and Year: BSBA MM3
Subject: MMEL02 Franchising
Instructor: Ma’am Maria Tonnette Gulilat
Schedule:
Week 8 and 9 Midterm Assessment
QUESTIONS:
1. What does the initial franchise fee cover? Does it include a starting inventory of supplies and
products?
2. How are the periodic royalties calculated and when they are paid?
3. Are all trademarks and names legally protected?
4. Who selects the location of your business?
5. Are you assigned an exclusive territory?
6. If the territory is not exclusive, does the franchise have the right of first refusal on additional
franchises established in nearby locations?
7. Is the franchisee required to purchase equipment and supplies from the franchisor from other
suppliers?
8. Under what conditions can the franchisor and/or the franchisee terminate the franchise
agreement?
9. Can the franchise be assigned to heirs?
10. Who provides and pays for advertising and promotional items?
ANSWERS:
I choose McDonald’s by Sanjana Joshi
1. The initial franchise fee covers a large portion of the already high costs of starting a new
company. They understand that a new entrepreneur often has to choose between following his
or her dreams and creating something unique. McDonald's initial franchise fee is $45,000 at the
time of publication. This is in addition to any new business owner's start-up costs and does not
include tangible costs like equipment, supplies, or rent. It does, however, provide several
intangible benefits to the new owner that significantly reduce the risks of opening a restaurant.
2. Almost every franchisee will expect you to pay royalties regularly, usually once a month.
Royalties are typically calculated as a percentage of sales, but they could also be calculated as a
percentage of profits. McDonald's requires a 25% cash down payment for your store, with the
remainder financed for no more than seven years.
establishing a restaurant
3. McDonald's or its licensors' trademarks, service marks, and all graphical elements, including the
look and feel of the online services, are distinctive and protected trademarks or trade dress.
Various third-party names, trademarks, and service marks that are the property of their
respective owners may appear on the online services.
4. McDonald’s franchises contain a limited grant of authority to use the McDonald’s System in the
operation of the specific restaurant developed by McDonald’s at that address. Franchises will
not receive an exclusive territory.
5. If the territory isn't exclusive, the franchise may or may not have the first refusal on new
franchises that open up in nearby areas; it all depends on the territory. Checking the franchise
agreement will tell you whether you do or not.
6. Other suppliers, which could be any, are required to purchase equipment and supplies from
franchisees.
7. The franchisees are required to purchase equipment and supplies from other suppliers it could
be any supplier.
8. Franchisees who have been "disenfranchised" by the experience of owning a franchised
business frequently inquire about how to get out of a franchise agreement. This is not usually
the case with franchising. Many franchise businesses are legitimate and profitable.
Unfortunately, many franchise systems are untested or unproven, with insufficient resources to
support franchisees and keep the promise of business success alive. In the latter case, a
franchisee who is losing a substantial amount of money from the business may be justified in
wanting to terminate the franchise agreement. The default and termination provisions in the
franchise agreement are usually the focus of the analysis for franchisors who want to terminate
a franchise agreement with a franchisee or to terminate a franchisee in that sense. Without
going to court, a franchisor can often exercise what is known as a "self-help remedy" by
terminating the franchise agreement and either shutting down or taking over the location.
9. Yes, it can be passed on to an heir within six months of a franchisee's death or mental
incapacity.
10. McDonald's pays for and provides advertising and promotional items, and the cooperative
handles all of the advertising.

Uploaded by

Uploaded by

Name: Kristine Jubahib

Course and Year: BSBA MM3

Subject: MMEL02 Franchising

Instructor: Ma’am Maria Tonnette Gulilat

Week 8 and 9 Midterm Assessment

I choose McDonald’s by Sanjana Joshi

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