Master TOEIC Reading: Franchise Agreement Practice Tests

Incomplete Sentences (Part 1)

Let’s start with 30 questions testing your grammar and vocabulary skills related to franchise agreements. Choose the best word or phrase to complete each sentence.

1. The franchisor reserves the right to _____ the agreement if the franchisee violates any terms.
   A. terminate
   B. terminating
   C. terminated
   D. termination

2. The franchisee must _____ to the quality standards set by the franchisor.
   A. adhere
   B. stick
   C. glue
   D. paste

3. Royalty fees are typically calculated as a _____ of gross sales.
   A. percentage
   B. portion
   C. section
   D. fragment

4. The franchise agreement outlines the _____ responsibilities of both parties.
   A. respective
   B. respecting
   C. respected
   D. respectable

5. Franchisees are required to _____ regular reports on their financial performance.
   A. submit
   B. subject
   C. submerge
   D. sublime

6. The franchisor provides initial and _____ training to ensure consistent operations.
   A. ongoing
   B. continuous
   C. perpetual
   D. everlasting

7. Intellectual property rights are _____ protected under the franchise agreement.
   A. strictly
   B. loosely
   C. vaguely
   D. roughly

8. The franchisee must obtain written _____ before making any modifications to the business model.
   A. approval
   B. approving
   C. approved
   D. approvement

9. Failure to comply with the agreement may result in _____ of the franchise license.
   A. revocation
   B. revoke
   C. revoking
   D. revoked

10. The franchisor retains the right to _____ the franchisee’s operations to ensure compliance.
    A. inspect
    B. inspection
    C. inspecting
    D. inspected

11. Franchisees are often required to contribute to a marketing _____ managed by the franchisor.
    A. fund
    B. budget
    C. account
    D. pool

12. The agreement specifies the _____ territory in which the franchisee can operate.
    A. designated
    B. designating
    C. designate
    D. designation

13. Both parties must _____ in good faith throughout the duration of the agreement.
    A. act
    B. acting
    C. acted
    D. action

14. The franchisee is responsible for _____ all necessary licenses and permits.
    A. obtaining
    B. obtain
    C. obtained
    D. obtainment

15. Any _____ to the franchise agreement must be made in writing and signed by both parties.
    A. amendments
    B. amending
    C. amend
    D. amended

16. The franchisor may _____ additional units to the franchisee based on performance.
    A. award
    B. awarding
    C. awarded
    D. awardment

17. Confidentiality clauses protect against the _____ of proprietary information.
    A. disclosure
    B. disclose
    C. disclosing
    D. disclosed

18. Franchisees must adhere to the _____ operating procedures outlined in the manual.
    A. standardized
    B. standard
    C. standards
    D. standardization

19. The agreement includes provisions for dispute _____ through mediation or arbitration.
    A. resolution
    B. resolving
    C. resolve
    D. resolved

20. Franchisees are typically required to maintain specific levels of _____ coverage.
    A. insurance
    B. insure
    C. insuring
    D. insured

21. The franchisor may _____ the right to purchase the franchisee’s business upon termination.
    A. reserve
    B. reserving
    C. reserved
    D. reservation

22. Franchisees must comply with all _____ laws and regulations in their area of operation.
    A. applicable
    B. applying
    C. applied
    D. application

23. The agreement outlines the process for _____ the franchise to another party.
    A. transferring
    B. transfer
    C. transferred
    D. transferable

24. Franchisees are often prohibited from _____ in competing businesses during and after the agreement.
    A. engaging
    B. engage
    C. engaged
    D. engagement

25. The franchisor provides _____ support to help franchisees establish and grow their businesses.
    A. ongoing
    B. continued
    C. continuous
    D. continuing

26. Franchisees must maintain accurate financial _____ and provide them to the franchisor upon request.
    A. records
    B. recording
    C. recorded
    D. recordable

27. The agreement specifies the _____ for renewing the franchise after the initial term.
    A. conditions
    B. conditioning
    C. conditioned
    D. conditional

28. Franchisees are required to participate in _____ marketing campaigns organized by the franchisor.
    A. national
    B. nationally
    C. nationalizing
    D. nationalized

29. The franchisor may _____ changes to the system-wide branding and marketing strategies.
    A. implement
    B. implementing
    C. implemented
    D. implementation

30. Failure to meet performance _____ may result in termination of the franchise agreement.
    A. benchmarks
    B. benching
    C. benched
    D. benchmark

TOEIC Reading Practice: Franchise Agreement Questions

Text Completion (Part 2)

Now, let’s move on to four passages related to franchise agreements, each with four blanks to fill. Choose the best option to complete each blank.

Passage 1: Understanding Franchise Agreements

Franchise agreements are legally binding contracts that (1) the relationship between the franchisor and franchisee. These documents (2) the rights and obligations of both parties, ensuring a clear understanding of expectations. A typical franchise agreement (3) key aspects such as territory rights, royalty fees, and operational standards. It’s crucial for potential franchisees to carefully (4) the agreement before signing, as it governs the entire business relationship.

1. A. govern
   B. rule
   C. control
   D. manage

2. A. outline
   B. sketching
   C. draw
   D. paint

3. A. covers
   B. hides
   C. conceals
   D. masks

4. A. review
   B. ignore
   C. overlook
   D. dismiss

Passage 2: Key Components of Franchise Agreements

One of the most important elements in a franchise agreement is the (5) of intellectual property rights. This ensures that the franchisee can use the franchisor’s trademarks, logos, and business systems. The agreement also (6) the initial franchise fee and ongoing royalty payments, which are typically based on a percentage of gross sales. Additionally, it (7) the training and support the franchisor will provide, including initial training, ongoing operational assistance, and marketing support. Lastly, the agreement (8) the term of the franchise and conditions for renewal or termination.

5. A. licensing
   B. selling
   C. buying
   D. renting

6. A. specifies
   B. hides
   C. conceals
   D. obscures

7. A. details
   B. summarizes
   C. omits
   D. excludes

8. A. outlines
   B. confuses
   C. complicates
   D. muddles

Passage 3: Obligations and Restrictions in Franchise Agreements

Franchise agreements typically (9) specific obligations that the franchisee must fulfill. These may include adhering to quality standards, maintaining certain operating hours, and (10) in national marketing campaigns. The agreement often (11) restrictions on the franchisee’s activities, such as non-compete clauses and limitations on selling unapproved products or services. Franchisors usually retain the right to (12) the franchisee’s operations to ensure compliance with these terms and protect the brand’s reputation.

9. A. impose
   B. suggest
   C. recommend
   D. propose

10. A. participating
    B. avoiding
    C. escaping
    D. evading

11. A. includes
    B. excludes
    C. omits
    D. neglects

12. A. inspect
    B. ignore
    C. overlook
    D. disregard

Passage 4: Resolving Disputes in Franchise Relationships

Despite the best efforts of both parties, disputes may arise in a franchise relationship. Most franchise agreements (13) specific procedures for resolving conflicts, often starting with informal discussions or mediation. If these methods fail, the agreement may (14) for arbitration or litigation. Many agreements include a choice of law provision, which (15) which state’s laws will govern any disputes. It’s important for both franchisors and franchisees to understand these dispute resolution mechanisms and to (16) legal counsel if conflicts arise.

13. A. outline
    B. hide
    C. conceal
    D. mask

14. A. provide
    B. prohibit
    C. forbid
    D. ban

15. A. specifies
    B. confuses
    C. complicates
    D. muddles

16. A. seek
    B. avoid
    C. evade
    D. escape

Franchise Agreement Dispute Resolution Process

Answer Key

Incomplete Sentences (Part 1)

1. A
2. A
3. A
4. A
5. A
6. A
7. A
8. A
9. A
10. A
11. A
12. A
13. A
14. A
15. A
16. A
17. A
18. A
19. A
20. A
21. A
22. A
23. A
24. A
25. A
26. A
27. A
28. A
29. A
30. A

Text Completion (Part 2)

Passage 1:

1. A
2. A
3. A
4. A

Passage 2:
5. A
6. A
7. A
8. A

Passage 3:
9. A
10. A
11. A
12. A

Passage 4:
13. A
14. A
15. A
16. A

These practice tests focus on vocabulary and grammar related to franchise agreements, helping you prepare for the TOEIC Reading section. Remember to review the bold words and phrases, as they represent key terminology and complex grammatical structures often found in business and legal contexts. Good luck with your TOEIC preparation!