Exam 4: Franchises and Buyouts

Which of the following statements about the International Franchise Association (IFA) is NOT true?

Match the term with its definition. -A detailed statement providing information about the franchisor that satisfies the franchise disclosure requirements of the FTC

Matthew is an individual acting as a sales agent with the responsibility for finding new franchisees within a specified territory. Matthew is a(n)

An entrepreneur would choose a franchise over an independent startup most likely because of the

Susan is considering buying the local franchisee of Pots-R-Us. Before making the purchase, as part of the due diligence process, she should do all of the following EXCEPT

A franchisor that sells another franchise location within the market area of an existing franchisee is using a piggybacking franchising strategy.

There is no need to find out more information about a prospective franchise as the franchisor should be the primary source of information.

Match the term with its definition. -Bringing two or more franchise brands together within a single enterprise

Before signing a franchise contract, a potential franchisee should obtain the services of which of the following

Because the relationship between franchisor and franchisee is similar to a marriage, it is important that the prospective franchisee investigate the opportunity thoroughly. What questions should a prospective franchisee ask to aid in assessing the franchise?

A _____ may be the single most valuable tool provided to a franchisee.

Financial statements can mislead a potential buyer trying to develop an accurate business valuation.

Match the term with its definition. -To sell another franchise location within the market area of an existing franchise

Match the term with its definition. -An agreement in which the buyer promises the seller that s/he will not reveal confidential information or violate the seller's trust

Which of the following companies is credited with being the first franchisor in the United States?

Quality Dining, Inc., operates several different restaurant franchises including Burger King and Chili's. Quality Dining has its own corporate structure and stockholders. This corporation is an example of

Most franchise experts recommend that the Franchise Disclosure Document (FDD) be reviewed by

In addition to the regular monthly payment of a percentage of gross income to her franchisor, Wilma is required to submit a smaller percentage for advertising costs. She is willing to do this because

The unscrupulous actions by franchisors to void the contracts of franchisees in order to sell the franchise to someone else and collect an additional fee is called chewing.

Define the terms franchising, franchisor, and franchisee. Apply these terms to McDonald's or another franchise example.