pay a fee. a. NOT: anticipated costs of operation. Which of the following statements most accurately describes the success rate of franchises? number of competitors. Meeting with every member of the current staff. The inventory should be examined for which of the following? Henry approaches her about operating his own business under the terms above. On-site management In exchange for an ownership share, small businesses receive financing from a group of investors known as 3- Customers already know you exist. invest money in the operation. 7-eleven Inc. Which major question in his business plan does this statement address? How long has a franchisor been in the business? Compensate the franchisee for the use of its trademark. D) Many legal disputes loss of freedom and control as franchise system grows. A franchisor typically provides _______ to develop performance management programs, quality controls methods, forecasting, and purchasing of equipment, which are very valuable services that act as guidelines rather than mandates in deciding on a franchise. c. Collecting a percentage of sales from each franchisee Matilda would like to open an ice cream and sweet treats store but she will need a loan to do so. C) Popularity What helps you identify the customers whose needs your franchise best satisfies? C. Increased regulatory scrutiny. B) Contractual obligations D. Service providers that wish to maintain a high degree of control over channel members are likely to use the franchise channel model. d. The Federal Trade Commission regulates franchise. a. Why do most franchisees choose to go into business with a franchised company? The franchisor licenses its trademarked products to franchisees. Repeat the test using the critical value approach. Which of the following statements regarding what franchisors include as part of their package are correct? The reason franchises have been a popular form of business is due to ___________. What crucial element is necessary for the success of co-branding partners? As it pertains to the scope and importance of franchising, which of the following statements is most accurate? a. a. market value. There is no need for legal representation when entering into a franchise agreement. b. Which of the following antitrust legislation laws makes it illegal for competitors to get together and set prices on the products or services they sell? She heard about a business model in which an individual or organization grants a license to another to operate an individually owned business as though it were part of a chain of outlets or stores. d. 2. Service providers that wish to maintain a high degree of control over channel members are likely to use the franchise channel model. A) Fees and costs WebThe way to approach a new business venture is to think up a good or service that is unique. c. This includes all of the following except: of dollars instead of units. A) Training E) None of the above, Franchisors are focused on creating wealth for ________. D) Both A and B franchisor supplies brand names, techniques, or other services instead of a complete product. E. Quality control standards. WebA franchise agreement granting the right to use a widely recognized product or trademark. Where is Ellis most likely to go for advice and guidance about running the outlet? H0:1222Ha:12>22\begin{aligned} In product distribution franchises: Reno decides to purchase and operate a McDonald's restaurant. a. The party granting the license is the. Franchisors capitalizing or financing their businesses are generally required to disclose three key financial statements. A leading apparel manufacturing firm in the United States invites applications to establish franchises in Texas. c. Which of the following is an advantage to the franchisee? Entitle the franchisee to use the franchise's name. Regarding the issue of control of franchisees by franchisors, which of the following is most accurate? The franchisor says it has the power to control which suppliers the franchisees use due to implied powers in the franchise agreement. What pricing strategy should the firm use? An advantage to buying an on-going business is c. b. Brent and Wendy plan to open a new business. E) Regret, Performing due diligence may include ________. The person who gets the franchise is usually required to do all of the following except: C. Potential to reduce distribution costs Is a specialized broker who handles all arrangements for closing a buyout, The purchase price of a business is determined by the negotiation between. E. Possible high level of managerial motivation fostered by franchising. B) Business-format franchising Entitles the franchisee the right to open a business in a given area. D) Removes the creativity and freedom A potential franchisor is concerned that the franchisees will destroy the reputation of the company and end up hurting his business. the franchisor. provide professional management training to the unit's staff. c. 5-age. E. The desired degree of control of franchisees by franchisors is not relevant to the decision by franchisors to use the franchise channel model. a. a. Compared to other types of businesses, the failure rate for franchises is __________. c. Franchisees benefit from continued franchisor research and development of products and processes. What is the owner's personal net worth? d. c. (pg 134) according to Brian Hendricks, what are the 5 "p's" of entrepreneurship. The general purpose of a promotions package by the franchisor to potential franchisees is to: From a broad perspective, ( ) means effective communication and promotion of the franchised product or service to the targeted audience. d. E) All of the above, The term "FDD" stands for which of the following? A regular and continuous fee paid to the franchisor by the franchisee is called: B) They are always surprise inspections. c. If you are looking to start a business that is creative and is not controlled by others, then franchising is your best option. The franchisor's responsibilities include providing And, how much will it cost to implement? Any cost saving resulting from franchisee purchasing power helps to offset other costs, such as franchise ________. D) Legal action old-new NOT: prospective franchises being recruited into the system. amount to the government independent of his or her Supplier Control. Which of the following activities at the franchisor's headquarters office should be the center of attention? 40%, Which franchise is not included in the top ten franchises? A Starbucks franchise located inside a Target store is called ___________ franchising. Considering the processes of management for a the franchise system, overall planning of the firm for today's operations and the future of the system itself is the primary responsibility of, NOT: franchisees A. The 2014 Annual Report for Murphy Oil Corporation (see www.murphyoilcorp.com) shows the following numbers of barrels of crude oil produced per day in the United States annually from 2008 through 2014: Develop a bar chart that illustrates these data. d. B) Financing assistance The difference between single-unit and multi-unit franchises is: Which of the following are benefits of purchasing a franchise? A) In traditional stand-alone units Which is not a start-up expense? Uniform Franchise Offering Circular (UFOC) Capital requirements that a potential franchisee must consider prior to becoming part of a franchise system include each of the following except for: Reasons a franchise system would have corporate locations, as well as franchisee locations are shown below, except for: franchisor avoids potential conflict with franchisees that may rise based upon market and site locations. Franchisors benefit from the franchise agreement because they have. NOT: inventory management and recovery. procedures are essentially "set in stone.". the franchisee Who is correct? a trade restriction clause. the owner's family stability and relationships. B. E) All of the above, The FDD includes information such as ________. equipment. It is a channel used exclusively for distribution of consumer durable goods. The two main reasons for failure in business are: NOT: inadequate business plan and poor management. majority A. In 2016, the International Franchise Association reported that franchises in the United States (US) provided nearly ______ direct jobs. Which of the following is a question which can be sidestepped when buying a business? the franchisor NOT: sufficient time to integrate the brands MAYBE: natural synergy between the brands. Pick the correct phrase from the following that best characterizes the relationship between franchisors and franchisees. What is the condition of the inventory? awareness of some of the unfilled promises from franchisors, Which of the following costs do not add to the cost of franchising? One of the special focus areas of the SBA is to, assist minorities wanting to start or expand small businesses, A business seeking a loan through the Small Business Administration will actually be given a loan through. The number of jobs provided by franchised businesses is slightly less than those provided by durable goods manufacturing. whether employees with key skills will stay or leave. C) Ensures ongoing support journal, general ledger, financial statements. all of the above. E) All of the above, Franchisors are ________ to provide operating manuals and training to their franchisees, which are a valuable resource for success. Sales records are of very little value to a buyer in evaluating a company's worth. The founding a franchise is quite ________ in form and method to creating a new business from scratch. Bill has his own tax preparation and accounting business. d. Business related reasons for selling may include all but which of the following? Business format franchising is best illustrated by the system offered by, The franchising strategy whereby an individual or firm is granted the legal right to own more than one unit of a franchised business is known as. T/F, A disadvantage of purchasing a franchise is that franchisors seldom provide adequate training programs. all of the above. Independence and a desire to determine one's own destiny are some of the entrepreneurs' personal factors in small-business success, others include: Jennifer would like to open her own business. How does Auntie Anne's ensure that new franchisees understand the company's operational approach? Automobile dealerships and ___ were the primary uses for franchises in the early days of franchise agreements. Potential franchisees should examine the franchisor's package and balance the cost and the _________ being offered. D. Usage tax. b. A) Internet franchises B) Conversion franchises C) Co-branding franchises D) Piggybacking franchises E) Leapfrogging franchises E) Leapfrogging franchises Any cost saving resulting from This desire is referred to as. What is the name of the business agreement Henry would sign? The number of franchised business establishments has continued to growth in the U.S. Today there are approximately ( ) franchise businesses in operation. Approximately what percentage of food franchises are co-branded units? How might you describe the professional approach to sales? A) Recognition new-new These are questions directly associated with which phase of marketing strategy for a franchise system? equity? T/F, One benefit of becoming a franchisee is sharing a profits with the franchisor. Which of the following best describes the industry she operates in? The way to approach a new business venture is to think up a good or service that is unique. NOT: to generate data which can be used to accumulate working knowledge Which one of the following is not part of a franchise business arrangement? Why might it be a good idea for a franchisor to investigate several ASP vendors before choosing one? a. The potential value of any D. Is based on a percentage of the franchisee's gross sales. pay a fee. d. The franchise distribution system is composed of approximately _________ franchise business establishments that provide more than 11 million jobs. His actions are possible because small businesses. E. All of the above are about equal. The franchisor licenses its trademarked products to franchisees. Which of the following is NOT an element of virtual relationship management in e-business strategy? In multi-unit franchisees, franchisees receive permission from the franchisor to own and operate more than one unit at the outset of their relationship, whereas single-unit franchises initially only receive permission to operate a single unit. Test the following hypotheses at the .05.05.05 level of significance. Which one of the options below is not one of these critical customer perception factors? T/F, There is no need to find out more information about a prospective franchise as the franchisor should be the primary source of information T/F, A franchising strategy whereby a single franchise owns more than one unit in a given area is typically referred to as an area developer strategy T/F, The potential value of any franchise arrangement is defined by the rights outlined in the franchise contract. Franchises include the business name and a general plan for business operations.