Exam 15: Franchising

James Ryan has been a Coors Beer distributor for the past 20 years. James owns a ________ franchise.

General Motors operates a ________ franchise system.

Uptown Cheapskate, the company profiled in the opening feature of Chapter 15, was started by Chelsea and Scott Sloan. According to the feature, Chelsea and Scott decided to grow Uptown Cheapskate via franchising because they wanted to ________.

Which of the following statements is incorrect regarding product and trademark franchises?

Franchising is a form of business organization in which a firm that already has a successful product or service licenses its trademark and method of doing business to other businesses in exchange for an initial franchise fee and an ongoing royalty.

Business format franchises typically allow franchisees substantial flexibility in how they run their individual franchise units.

A Pepsi Cola bottling dealership is an example of a business format franchise.

According to the textbook, a franchisee's weekly or monthly royalty fees are typically around ________ percent of gross income.

In the majority of cases, a franchisee pays the franchisor a royalty based on ________.

The royalty fees a franchisee pays are usually around four to five percent of gross income.

According to a recent FTC report, instances of problems between franchisors and their franchisees tend to be ________.

The document that consummates the sale of a franchise is called the ________.

According to the textbook, from the franchisor's point of view, the primary disadvantage of franchising is that ________.

The two distinctly different types of franchise systems are ________ franchise and ________ franchise.

To avoid making a hasty judgment, a franchisee may not purchase a franchise for ________ days from the time the Franchise Disclosure Document is received.

Jenna Page recently entered into an agreement with Anytime Fitness to open five Anytime Fitness franchises. According to the agreement that Jenna entered into, she has the right to open up to five Anytime Fitness franchises within the city limits of Lawrence, Kansas. Jenna has entered into a(n) ________ franchise agreement.

In the majority of cases, a franchisee pays a royalty based on a percentage of weekly or monthly net income.

Which of the following statements is incorrect regarding franchising?

There are two primary advantages to buying a franchise over other forms of business ownership. First, the franchisor typically provides training, technical expertise, and other forms of support, and second, ________.

An advantage of franchising, from the franchisors point of view, is that franchising helps a venture grow because the franchisees provide the majority of the capital.