Exam 15: Franchising

According to the textbook, the first rule of buying a franchise is ________.

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

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

Franchisees are often required to pay into a national or regional advertising fund, even if the advertisements are directed at goals other than promoting the franchisor's product or service.

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.

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.

Which of the following statements is incorrect regarding franchising?

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

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

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

A(n) ________ franchise agreement involves the sale of a single franchise for a specific location.

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.

Which of the following is not an industry in which business format franchises predominate?

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 ________.

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

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

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

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

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.