Wisconsin Esthetics State Board Practice Test

What is the main characteristic of a franchise?

1. It is always a corporation structure

2. It is a license to operate under an established brand

3. It must be run as a sole proprietorship only

4. It provides full ownership of the entire business model

The correct answer is: It is a license to operate under an established brand

The main characteristic of a franchise is that it is a license to operate under an established brand. This means that individuals or companies can operate their businesses using the branding, products, and operational methods of an established company. By purchasing a franchise, franchisees gain access to the franchisor’s brand reputation, business model, and support systems, which are critical for reducing the risks often associated with starting a new business. Franchising allows for a standardized approach to business, where franchisees can benefit from the marketing, training, and ongoing support provided by the franchisor. This model creates a symbiotic relationship where both parties can succeed, enabling faster growth and market penetration for the brand on a broader scale while allowing franchisees to benefit from the established recognition and customer loyalty associated with the brand. The other choices do not accurately characterize the essence of a franchise. For instance, although certain franchises may operate as corporations, not all franchises are structured this way. Additionally, franchises can be run by individuals or partnerships, not exclusively as sole proprietorships. Lastly, owning a franchise does not grant full ownership of the entire business model; instead, franchisees operate under the business model defined by the franchisor, meaning certain limitations and obligations are in place.