Exam 6: Franchising and the Entrepreneur

Having an attorney review and evaluate a franchise contract really is unnecessary since the FTC requires all franchisers to offer a "standard" franchise contract.

Nancy has owned her own hair salon for ten years.She's recently signed an agreement with Budget Cutters to become one of their outlets.This is an example of conversion franchising.

A master franchise gives the franchisee the right to combine two distinct franchises under one roof.

Although franchising is the fastest growing segment of small business,it has drawbacks.Name and explain at least five drawbacks to franchising from the franchisee's perspective.

A significant advantage a franchisee has over the independent small business owner is participation in the franchisor's centralized and large-volume buying power.

In franchising,a ________ pays fees and royalties to a ________ in return for the right to sell its products or services under the franchiser's trade name and often to use its business format and system.

Pure franchising occurs when the franchisee purchases only the right to become identified with the franchiser's trade name.

Pure franchising is also referred to as:

The failure rate for franchises is well below that for other types of new businesses.

The FTC verifies the accuracy of the franchise disclosure information required by the Trade Regulation Rule.

Trade name franchising involves licensing the rights to sell specific products under the manufacturer's brand name.

Under what circumstances would a typical franchiser have the right to cancel a franchise contract?

The type of franchising growing fastest is product distribution franchising.

Based on the principle of ________,the idea is to put a franchise's products or services directly in the paths of potential customers,wherever that may be.

Most franchise experts consider the most important factor in the success of a franchise to be:

Quality is so important in franchising that most franchisers retain the right to terminate the franchise contract and to repurchase the outlet if a franchisee fails to maintain quality standards.

In many franchises,strict uniformity is the rule rather than the exception.

The failure rate for franchises is:

The FTC's philosophy focuses on:

The fastest growth rate in franchises is among: