Question 1

In addition to FTC disclosure requirements, ________ states have laws providing additional protection to franchisees.

Accepted Answer

A)  6 
B)  10 
C)  15 
D)  33 
E)  47 
A)  6 
B)  10 
C)  15 
D)  33 
E)  47

Question 2

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

Accepted Answer

A product and trademark franchise is an

Question 3

One of the most important questions a prospective franchisor should consider is whether the fees and royalties charged by a franchisor are consistent with the franchise's value or worth.

Accepted Answer

A) True 
 B)False

Question 4

The Franchise Disclosure Document is the document that consummates the sale of a franchise.

Accepted Answer

A) True 
 B)False

Question 5

According to the textbook, the main disadvantage of buying a franchise is ________.

Accepted Answer

A)  franchise organizations typically grow slower than non-franchise organizations in the same industry 
B)  franchisors typically provide poor levels of support 
C)  the cost involved 
D)  the service sector of the U.S. economy is waning in importance 
E)  franchising is waning in its popularity 
A)  franchise organizations typically grow slower than non-franchise organizations in the same industry 
B)  franchisors typically provide poor levels of support 
C)  the cost involved 
D)  the service sector of the U.S. economy is waning in importance 
E)  franchising is waning in its popularity

Question 6

All of the following are advantages to buying a franchise except ________.

Accepted Answer

A)  restrictions on creativity 
B)  potential for business growth 
C)  availability of financing 
D)  a proven product or service within an established market 
E)  franchisor's ongoing support 
A)  restrictions on creativity 
B)  potential for business growth 
C)  availability of financing 
D)  a proven product or service within an established market 
E)  franchisor's ongoing support

Question 7

The Franchise Disclosure Document contains a total of 23 categories of information that give a prospective franchisee a broad base of information about the background and financial health of the franchisor.

Accepted Answer

A) True 
 B)False

Question 8

The Savvy Entrepreneurial Firm feature in Chapter 15 focuses on Wahoo's Fish Taco, a franchise organization that offers Mexican food mixed with Brazilian and Asian flavors. According to the feature, one of the things the founders of Wahoo's did that has contributed to its success is elect to make Wahoo's ________.

Accepted Answer

A)  a relatively slow growth system, focusing on branding and service quality rather than rapid growth 
B)  a nationwide system, operating in all 50 states 
C)  an extremely affordable system to buy into, with a $9,000 original franchise fee and an ongoing royalty of only 2 1/2 percent 
D)  a niche franchise that is only available in theme parks and food courts of malls 
E)  a fast growth system to establish a clear first-mover advantage in its niche 
A)  a relatively slow growth system, focusing on branding and service quality rather than rapid growth 
B)  a nationwide system, operating in all 50 states 
C)  an extremely affordable system to buy into, with a $9,000 original franchise fee and an ongoing royalty of only 2 1/2 percent 
D)  a niche franchise that is only available in theme parks and food courts of malls 
E)  a fast growth system to establish a clear first-mover advantage in its niche

Question 9

Which of the following was NOT identified in the textbook as one of the disadvantages of franchising a business?

Accepted Answer

A)  Loss of control 
B)  Friction with franchisees 
C)  Franchisee motivation 
D)  Differences in required business skills 
E)  Legal expenses 
A)  Loss of control 
B)  Friction with franchisees 
C)  Franchisee motivation 
D)  Differences in required business skills 
E)  Legal expenses

Question 10

Melanie Jacobs recently opened a Papa John's franchise. So far, she is very satisfied with Papa John's because in exchange for an initial franchise fee and an ongoing royalty payment, Papa John's has provided Melanie a formula for doing business along with training, advertising, and other forms of assistance. Melanie purchased a ________ franchise.

Accepted Answer

A)  business extension 
B)  formula driven 
C)  sales extension 
D)  product and trademark 
E)  business format 
A)  business extension 
B)  formula driven 
C)  sales extension 
D)  product and trademark 
E)  business format

Question 11

Franchising is appropriate when a ________.

Accepted Answer

A)  firm's business methods are not polished, it has a desire to grow, and it is trying to commercialize a technology product 
B)  firm has a strong trademark, a desire to grow, and a well-designed business method 
C)  firm is trying to commercialize a technology product, it is well-funded, and it has a desire to grow 
D)  firm has a weak trademark, it is well-funded, and it has a desire to grow 
E)  firm has a desire to grow, it has a well-designed business method, and it is well funded 
A)  firm's business methods are not polished, it has a desire to grow, and it is trying to commercialize a technology product 
B)  firm has a strong trademark, a desire to grow, and a well-designed business method 
C)  firm is trying to commercialize a technology product, it is well-funded, and it has a desire to grow 
D)  firm has a weak trademark, it is well-funded, and it has a desire to grow 
E)  firm has a desire to grow, it has a well-designed business method, and it is well funded

Question 12

While franchise agreements vary, each agreement typically contains these sections: the ________ agreement and the ________ agreement.

Accepted Answer

A)  statutory; purchase 
B)  franchise; buy 
C)  buy; membership 
D)  procurement; statutory 
E)  purchase; franchise 
A)  statutory; purchase 
B)  franchise; buy 
C)  buy; membership 
D)  procurement; statutory 
E)  purchase; franchise

Question 13

Franchising is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to another business in exchange for ________.

Accepted Answer

A)  an initial franchise fee and an ongoing royalty 
B)  a one-time franchise fee 
C)  an equity position in the new business 
D)  an ongoing royalty 
E)  an initial franchise fee and an equity position in the new business 
A)  an initial franchise fee and an ongoing royalty 
B)  a one-time franchise fee 
C)  an equity position in the new business 
D)  an ongoing royalty 
E)  an initial franchise fee and an equity position in the new business

Question 14

________ is a form of business ownership 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.

Accepted Answer

A)  Licensing 
B)  Joint Venturing 
C)  Contracting 
D)  Franchising 
E)  Sub-Contracting 
A)  Licensing 
B)  Joint Venturing 
C)  Contracting 
D)  Franchising 
E)  Sub-Contracting

In addition to FTC disclosure requirements, ________ states have laws providing additional protection to franchisees.

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

One of the most important questions a prospective franchisor should consider is whether the fees and royalties charged by a franchisor are consistent with the franchise's value or worth.

The Franchise Disclosure Document is the document that consummates the sale of a franchise.

According to the textbook, the main disadvantage of buying a franchise is ________.

All of the following are advantages to buying a franchise except ________.

The Franchise Disclosure Document contains a total of 23 categories of information that give a prospective franchisee a broad base of information about the background and financial health of the franchisor.

Which of the following was NOT identified in the textbook as one of the disadvantages of franchising a business?

Franchising is appropriate when a ________.

While franchise agreements vary, each agreement typically contains these sections: the agreement and the agreement.

Franchising is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to another business in exchange for ________.

________ is a form of business ownership 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.

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

In addition to FTC disclosure requirements, ________ states have laws providing additional protection to franchisees.

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

One of the most important questions a prospective franchisor should consider is whether the fees and royalties charged by a franchisor are consistent with the franchise's value or worth.

The Franchise Disclosure Document is the document that consummates the sale of a franchise.

According to the textbook, the main disadvantage of buying a franchise is ________.

All of the following are advantages to buying a franchise except ________.

The Franchise Disclosure Document contains a total of 23 categories of information that give a prospective franchisee a broad base of information about the background and financial health of the franchisor.

Which of the following was NOT identified in the textbook as one of the disadvantages of franchising a business?

Franchising is appropriate when a ________.

While franchise agreements vary, each agreement typically contains these sections: the ________ agreement and the ________ agreement.

Franchising is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to another business in exchange for ________.

________ is a form of business ownership 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.

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

While franchise agreements vary, each agreement typically contains these sections: the agreement and the agreement.