FranchiseCanada SeptemberOctober 2017

FranchiseCanada September | October 2017 111

franchisees should also seek advice from an accountant
and the bank to ensure that they can financially afford

the investment. The bank may also request a copy of the

Disclosure Document so that they can make an informed

lending decision.

STUDY QUESTIONS

FRANCHISE TUTORIAL

(continued from page 119)

Answer Key: 1) c 2) b 3) b 4) b Answer Key: 1) a 2) c 3) a 4) a

tutorial 3

1. From a potential franchisee perspective,
   deposits benefit by:
   a) allowing the franchisee to earn interest on
   deposits held by the franchise system.
   b) allowing the franchisee to opt out of paying
   royalties.
   c) allowing the franchisee to put a territory
   on hold while he/she does his/her
   due diligence, arranges financing, has
   documents reviewed by a lawyer, or finds
   an approved location.


2. Deposit Agreements:
   a) define payments made to financial
   institutions for financing start-up costs
   involved in franchising.
   b) define how and if the deposit will be returned,
   provide timelines, and typically address the
   issue of confidentiality.
   c) define the conditions for paying the franchise
   fee in monthly installments.


3. There are no provincial legislations
   regulating franchise deposits.
   True or False?
   a) True b) False


4. Deposits are non-refundable.
   True or False?
   a) True b) False

tutorial 4

1. Disclosure Documents are provided to
   potential franchisees:
   a) to assist them in making informed business
   decisions and to learn more about the
   franchise opportunity.
   b) to return their personal financial history to
   the franchise system.
   c) as a marketing material to distribute to
   other potential franchisees.


2. Franchise systems are currently required
   by law to provide Disclosure Documents in:
   a) Alberta, Saskatchewan, and Ontario.
   b) Alberta, Ontario, and Nova Scotia.
   c) Alberta, Ontario, and Prince Edward Island.


3. The Disclosure Document will typically
   include a list of existing franchisees, with
   contact information.
   True or False?
   a) True b) False


4. The Disclosure Document is only a
   summary of important information.
   True or False?
   a) True b) False