Question 1

A prospective franchisee should fully understand all the information contained in the Franchise Disclosure Document before a franchise agreement is signed.

Accepted Answer

A) True 
 B)False

Question 2

From the franchisor's point of view, which of the following is incorrect regarding franchising?

Accepted Answer

A)  Establishing a franchise system should be approached carefully and deliberately. 
B)  Franchising is a relatively simple business endeavor. 
C)  Franchising involves managerially demanding tasks. 
D)  Over the years a number of fraudulent franchise organizations have come and gone. 
E)  Franchising is a fairly heavily regulated form of business ownership. 
A)  Establishing a franchise system should be approached carefully and deliberately. 
B)  Franchising is a relatively simple business endeavor. 
C)  Franchising involves managerially demanding tasks. 
D)  Over the years a number of fraudulent franchise organizations have come and gone. 
E)  Franchising is a fairly heavily regulated form of business ownership.

Question 3

The majority of franchisors are highly ethical individuals who are interested only in making a fair return on their investment.

Accepted Answer

A) True 
 B)False

Question 4

Advertising fees that franchisees have to pay the franchisor are typically less than ________ percent of gross income.

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
E)  5 
A)  1 
B)  2 
C)  3 
D)  4 
E)  5

Question 5

According to our textbook, which of the following is NOT a quality to look for in prospective franchisees?

Accepted Answer

A)  Individual, rather than team-oriented 
B)  Ability to follow instructions 
C)  Experience in the industry in which the franchisee operates 
D)  Ability to operate with minimal supervision 
E)  Adequate financial resources and a good credit history 
A)  Individual, rather than team-oriented 
B)  Ability to follow instructions 
C)  Experience in the industry in which the franchisee operates 
D)  Ability to operate with minimal supervision 
E)  Adequate financial resources and a good credit history

Question 6

An individual who is team oriented and has experience in the industry in which the franchise competes is a good candidate to be a franchisee.

Accepted Answer

A) True 
 B)False

Question 7

While franchise agreements vary, each agreement typically contains the purchase agreement and the ________ agreement.

Accepted Answer

A)  legal 
B)  procurement 
C)  conversion 
D)  sell 
E)  franchise 
A)  legal 
B)  procurement 
C)  conversion 
D)  sell 
E)  franchise

Question 8

A product and trademark franchise typically connects a single manufacturer with a network of dealers or distributors.

Accepted Answer

A) True 
 B)False

Question 9

What are the primary advantages and disadvantages to establishing a franchise system (from the franchisor's point of view)?

Accepted Answer

There are two primary advantages to fran

Question 10

A multiple-unit franchisee is a person who owns ________.

Accepted Answer

A)  franchise outlets from more than one franchisor 
B)  both product and trademark franchise outlets and business format franchise outlets 
C)  and operates more than one outlet of the same franchisor 
D)  more than 10 franchise outlets 
E)  franchise units from multiple franchisors 
A)  franchise outlets from more than one franchisor 
B)  both product and trademark franchise outlets and business format franchise outlets 
C)  and operates more than one outlet of the same franchisor 
D)  more than 10 franchise outlets 
E)  franchise units from multiple franchisors

Question 11

The What Went Wrong feature in Chapter 15 focuses on Sbarro's, the pizza chain. One of the main reasons for Sbarro's failure was the ________.

Accepted Answer

A)  decline in mall traffic 
B)  high prices of products 
C)  poor quality of products 
D)  dispute with franchisees 
E)  high number of franchises 
A)  decline in mall traffic 
B)  high prices of products 
C)  poor quality of products 
D)  dispute with franchisees 
E)  high number of franchises

Question 12

The people who buy franchises from master franchisees are typically called employee-franchisees.

Accepted Answer

A) True 
 B)False

Question 13

According to the textbook, the Comfort Keepers business idea lends itself to franchising because the ________.

Accepted Answer

A)  company has the ability to grow profitably and has a good trademark 
B)  company's business concept is easy to teach and individual Comfort Keeper outlets are inexpensive to open and operate 
C)  company has new technology to introduce to the marketplace 
D)  company has intellectual property and the ability to grow quickly 
E)  company has a good trademark and a good business method 
A)  company has the ability to grow profitably and has a good trademark 
B)  company's business concept is easy to teach and individual Comfort Keeper outlets are inexpensive to open and operate 
C)  company has new technology to introduce to the marketplace 
D)  company has intellectual property and the ability to grow quickly 
E)  company has a good trademark and a good business method

Question 14

List and explain three of the common misconceptions about franchising.

Accepted Answer

• Franchising is a safe investment. Fran

Question 15

According to a concept called ________ theory, it is more effective for the units of a growing chain to be run by franchisees than by managers because managers are usually paid a salary and may not be as committed to the success of their individual units as franchisees, who are in effect the owners of the units they manage.

Accepted Answer

A)  incentive 
B)  stimulus 
C)  agency 
D)  stewardship 
E)  motivation 
A)  incentive 
B)  stimulus 
C)  agency 
D)  stewardship 
E)  motivation

Question 16

The people who buy franchises from master franchises are typically called ________ franchisees.

Accepted Answer

A)  minor 
B)  secondary 
C)  mini 
D)  subordinate 
E)  sub 
A)  minor 
B)  secondary 
C)  mini 
D)  subordinate 
E)  sub

Question 17

Which of the following is NOT an advantage of buying a franchise?

Accepted Answer

A)  A proven product or service within an established system 
B)  Franchisor ongoing support 
C)  Availability of financing 
D)  Potential for business growth 
E)  Duration and nature of the commitment 
A)  A proven product or service within an established system 
B)  Franchisor ongoing support 
C)  Availability of financing 
D)  Potential for business growth 
E)  Duration and nature of the commitment

Question 18

Which of the following statements is correct regarding business format franchises?

Accepted Answer

A)  Business format franchises are less popular than product and trademark franchises. 
B)  A business format franchise can be very rigid and demanding. 
C)  Agricultural machinery dealerships and soft-drink bottlers are well-known examples of business format franchises. 
D)  Business format franchises are illegal in some states. 
E)  The business format franchisor obtains the majority of its income from selling its products to its dealers at a markup. 
A)  Business format franchises are less popular than product and trademark franchises. 
B)  A business format franchise can be very rigid and demanding. 
C)  Agricultural machinery dealerships and soft-drink bottlers are well-known examples of business format franchises. 
D)  Business format franchises are illegal in some states. 
E)  The business format franchisor obtains the majority of its income from selling its products to its dealers at a markup.

Question 19

When is franchising appropriate (from the business owner's point of view)? Provide an example of when franchising is appropriate and when it is inappropriate.

Accepted Answer

Franchising is appropriate when a firm h

Question 20

Which of the following is a company that is suitable for franchising but has a relatively small number of franchise outlets?

Accepted Answer

A)  Anytime Fitness 
B)  Hampton Inn Hotels 
C)  McDonalds 
D)  Starbucks 
E)  The UPS Store 
A)  Anytime Fitness 
B)  Hampton Inn Hotels 
C)  McDonalds 
D)  Starbucks 
E)  The UPS Store

A prospective franchisee should fully understand all the information contained in the Franchise Disclosure Document before a franchise agreement is signed.

From the franchisor's point of view, which of the following is incorrect regarding franchising?

The majority of franchisors are highly ethical individuals who are interested only in making a fair return on their investment.

Advertising fees that franchisees have to pay the franchisor are typically less than ________ percent of gross income.

According to our textbook, which of the following is NOT a quality to look for in prospective franchisees?

An individual who is team oriented and has experience in the industry in which the franchise competes is a good candidate to be a franchisee.

While franchise agreements vary, each agreement typically contains the purchase agreement and the ________ agreement.

A product and trademark franchise typically connects a single manufacturer with a network of dealers or distributors.

What are the primary advantages and disadvantages to establishing a franchise system (from the franchisor's point of view)?

A multiple-unit franchisee is a person who owns ________.

The What Went Wrong feature in Chapter 15 focuses on Sbarro's, the pizza chain. One of the main reasons for Sbarro's failure was the ________.

The people who buy franchises from master franchisees are typically called employee-franchisees.

According to the textbook, the Comfort Keepers business idea lends itself to franchising because the ________.

List and explain three of the common misconceptions about franchising.

The people who buy franchises from master franchises are typically called ________ franchisees.

Which of the following is NOT an advantage of buying a franchise?

Which of the following statements is correct regarding business format franchises?

When is franchising appropriate (from the business owner's point of view)? Provide an example of when franchising is appropriate and when it is inappropriate.

Which of the following is a company that is suitable for franchising but has a relatively small number of franchise outlets?

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Developing an Effective Business Model

Industry and Competitor Analysis

Writing a Business Plan

Preparing the Proper Ethical and Legal Foundation

Assessing a New Ventures Financial Strength and Viability

Building a New-Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Filters

Exam 15: Franchising

A prospective franchisee should fully understand all the information contained in the Franchise Disclosure Document before a franchise agreement is signed.

From the franchisor's point of view, which of the following is incorrect regarding franchising?

The majority of franchisors are highly ethical individuals who are interested only in making a fair return on their investment.

Advertising fees that franchisees have to pay the franchisor are typically less than ________ percent of gross income.

According to our textbook, which of the following is NOT a quality to look for in prospective franchisees?

An individual who is team oriented and has experience in the industry in which the franchise competes is a good candidate to be a franchisee.

While franchise agreements vary, each agreement typically contains the purchase agreement and the ________ agreement.

A product and trademark franchise typically connects a single manufacturer with a network of dealers or distributors.

What are the primary advantages and disadvantages to establishing a franchise system (from the franchisor's point of view)?

A multiple-unit franchisee is a person who owns ________.

The What Went Wrong feature in Chapter 15 focuses on Sbarro's, the pizza chain. One of the main reasons for Sbarro's failure was the ________.

The people who buy franchises from master franchisees are typically called employee-franchisees.

According to the textbook, the Comfort Keepers business idea lends itself to franchising because the ________.

List and explain three of the common misconceptions about franchising.

The people who buy franchises from master franchises are typically called ________ franchisees.

Which of the following is NOT an advantage of buying a franchise?

Which of the following statements is correct regarding business format franchises?

When is franchising appropriate (from the business owner's point of view)? Provide an example of when franchising is appropriate and when it is inappropriate.

Which of the following is a company that is suitable for franchising but has a relatively small number of franchise outlets?

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Developing an Effective Business Model

Industry and Competitor Analysis

Writing a Business Plan

Preparing the Proper Ethical and Legal Foundation

Assessing a New Ventures Financial Strength and Viability

Building a New-Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Filters