Question 1

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

Accepted Answer

A)  asking for a copy of the franchisor's annual report 
B)  checking the profitability of similar franchises 
C)  making sure the franchisor's industry is conductive to franchising 
D)  making proper arrangements for financing 
E)  not making a hasty decision 
A)  asking for a copy of the franchisor's annual report 
B)  checking the profitability of similar franchises 
C)  making sure the franchisor's industry is conductive to franchising 
D)  making proper arrangements for financing 
E)  not making a hasty decision E

Question 2

Which of the following companies is suitable for franchising?

Accepted Answer

A)  Home Depot 
B)  Dropbox 
C)  Qdoba Mexican Grill 
D)  Walmart 
E)  GoPro 
A)  Home Depot 
B)  Dropbox 
C)  Qdoba Mexican Grill 
D)  Walmart 
E)  GoPro C

Question 3

Home Depot is an example of an organization that is perfectly suited for franchising.

Accepted Answer

A) True 
 B)False  False

Question 4

According to the textbook, which of the following is NOT a cost that is typically associated with buying a franchise?

Accepted Answer

A)  Advertising fees 
B)  Continuing royalty payments 
C)  Trademark acquisition fee 
D)  Initial franchise fee 
E)  Capital requirements 
A)  Advertising fees 
B)  Continuing royalty payments 
C)  Trademark acquisition fee 
D)  Initial franchise fee 
E)  Capital requirements

Question 5

The Franchise Disclosure Document contains ________ categories of information.

Accepted Answer

A)  8 
B)  14 
C)  23 
D)  35 
E)  44 
A)  8 
B)  14 
C)  23 
D)  35 
E)  44

Question 6

In a business format franchise, the franchisor provides a formula for doing business to the franchisee along with training, advertising, and other forms of assistance.

Accepted Answer

A) True 
 B)False

Question 7

A management concept called agency theory refutes the value of franchising for organizations with multiple units, like restaurant chains.

Accepted Answer

A) True 
 B)False

Question 8

A ________ franchise is an arrangement under which the franchisor grants to the franchisee the right to buy its products and use its trade name.

Accepted Answer

A)  product and trademark 
B)  product extension 
C)  business format 
D)  production plus 
E)  business design 
A)  product and trademark 
B)  product extension 
C)  business format 
D)  production plus 
E)  business design

Question 9

The Franchise Disclosure Document is accepted in (or by) ________.

Accepted Answer

A)  11 states 
B)  all 50 states, all of Canada, and parts of Mexico 
C)  39 states and all of Canada 
D)  all 50 states and parts of Canada 
E)  all nations participating in the North America Free Trade Agreement 
A)  11 states 
B)  all 50 states, all of Canada, and parts of Mexico 
C)  39 states and all of Canada 
D)  all 50 states and parts of Canada 
E)  all nations participating in the North America Free Trade Agreement

Question 10

A master franchisee, in addition to having the right to open and operate a specific number of locations in a particular area, also has the right to ________.

Accepted Answer

A)  stop making royalty payments if its sales decline 
B)  sell products made by companies other than the franchisor 
C)  offer and sell the franchise to other people in its area 
D)  use its own operating manuals to run its franchise outlets 
E)  stop making royalty payments if it is losing money 
A)  stop making royalty payments if its sales decline 
B)  sell products made by companies other than the franchisor 
C)  offer and sell the franchise to other people in its area 
D)  use its own operating manuals to run its franchise outlets 
E)  stop making royalty payments if it is losing money

Question 11

International opportunities for franchising are becoming ________.

Accepted Answer

A)  less prevalent 
B)  neither more nor less prevalent 
C)  more prevalent for product and trademark franchise systems and less prevalent for business format franchise systems 
D)  more prevalent 
E)  less prevalent for product and trademark franchise systems and more prevalent for business format franchise systems 
A)  less prevalent 
B)  neither more nor less prevalent 
C)  more prevalent for product and trademark franchise systems and less prevalent for business format franchise systems 
D)  more prevalent 
E)  less prevalent for product and trademark franchise systems and more prevalent for business format franchise systems

Question 12

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.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  Soft drink bottlers 
B)  Business services 
C)  Hotels and motels 
D)  Quick service restaurants 
E)  Automotive service and repair 
A)  Soft drink bottlers 
B)  Business services 
C)  Hotels and motels 
D)  Quick service restaurants 
E)  Automotive service and repair

Question 14

Franchising is a popular form of business growth.

Accepted Answer

A) True 
 B)False

Question 15

In regard to international franchising, under a(n) ________ franchise agreement, the U.S. franchisor grants the rights to an individual or company (the developer) to develop multiple franchised businesses within a country or territory.

Accepted Answer

A)  indirect 
B)  global 
C)  concurrent 
D)  direct 
E)  express 
A)  indirect 
B)  global 
C)  concurrent 
D)  direct 
E)  express

Question 16

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

Accepted Answer

A)  individual 
B)  one-of-a-kind 
C)  sole 
D)  defined 
E)  general 
A)  individual 
B)  one-of-a-kind 
C)  sole 
D)  defined 
E)  general

Question 17

An area franchise agreement allows a franchisee to own and operate a specific number of outlets in a particular geographic area.

Accepted Answer

A) True 
 B)False

Question 18

In the context of international franchising, under a ________ franchise arrangement, the U.S. firm grants the rights to an individual or company (the master franchisee) to develop one or more franchise businesses and to license others to develop one or more franchise businesses within the country.

Accepted Answer

A)  master 
B)  direct 
C)  subordinate 
D)  concurrent 
E)  multinational 
A)  master 
B)  direct 
C)  subordinate 
D)  concurrent 
E)  multinational

Question 19

Jim Pierce just purchased the rights to develop multiple School of Rock franchises in Germany. Jim just purchased a(n) ________ franchise arrangement.

Accepted Answer

A)  concurrent 
B)  indirect 
C)  lateral 
D)  direct 
E)  subordinate 
A)  concurrent 
B)  indirect 
C)  lateral 
D)  direct 
E)  subordinate

Question 20

The ________ contains 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)  Franchise Due Diligence Certificate 
B)  Franchise Offering Contract 
C)  Standardized Franchise Contract 
D)  Franchise Disclosure Document 
E)  Franchise Code of Conduct 
A)  Franchise Due Diligence Certificate 
B)  Franchise Offering Contract 
C)  Standardized Franchise Contract 
D)  Franchise Disclosure Document 
E)  Franchise Code of Conduct

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

Which of the following companies is suitable for franchising?

Home Depot is an example of an organization that is perfectly suited for franchising.

According to the textbook, which of the following is NOT a cost that is typically associated with buying a franchise?

The Franchise Disclosure Document contains ________ categories of information.

In a business format franchise, the franchisor provides a formula for doing business to the franchisee along with training, advertising, and other forms of assistance.

A management concept called agency theory refutes the value of franchising for organizations with multiple units, like restaurant chains.

A ________ franchise is an arrangement under which the franchisor grants to the franchisee the right to buy its products and use its trade name.

The Franchise Disclosure Document is accepted in (or by) ________.

A master franchisee, in addition to having the right to open and operate a specific number of locations in a particular area, also has the right to ________.

International opportunities for franchising are becoming ________.

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.

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

Franchising is a popular form of business growth.

In regard to international franchising, under a(n) ________ franchise agreement, the U.S. franchisor grants the rights to an individual or company (the developer) to develop multiple franchised businesses within a country or territory.

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

An area franchise agreement allows a franchisee to own and operate a specific number of outlets in a particular geographic area.

In the context of international franchising, under a ________ franchise arrangement, the U.S. firm grants the rights to an individual or company (the master franchisee) to develop one or more franchise businesses and to license others to develop one or more franchise businesses within the country.

Jim Pierce just purchased the rights to develop multiple School of Rock franchises in Germany. Jim just purchased a(n) ________ franchise arrangement.

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

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

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

Which of the following companies is suitable for franchising?

Home Depot is an example of an organization that is perfectly suited for franchising.

According to the textbook, which of the following is NOT a cost that is typically associated with buying a franchise?

The Franchise Disclosure Document contains ________ categories of information.

In a business format franchise, the franchisor provides a formula for doing business to the franchisee along with training, advertising, and other forms of assistance.

A management concept called agency theory refutes the value of franchising for organizations with multiple units, like restaurant chains.

A ________ franchise is an arrangement under which the franchisor grants to the franchisee the right to buy its products and use its trade name.

The Franchise Disclosure Document is accepted in (or by) ________.

A master franchisee, in addition to having the right to open and operate a specific number of locations in a particular area, also has the right to ________.

International opportunities for franchising are becoming ________.

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.

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

Franchising is a popular form of business growth.

In regard to international franchising, under a(n) ________ franchise agreement, the U.S. franchisor grants the rights to an individual or company (the developer) to develop multiple franchised businesses within a country or territory.

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

An area franchise agreement allows a franchisee to own and operate a specific number of outlets in a particular geographic area.

In the context of international franchising, under a ________ franchise arrangement, the U.S. firm grants the rights to an individual or company (the master franchisee) to develop one or more franchise businesses and to license others to develop one or more franchise businesses within the country.

Jim Pierce just purchased the rights to develop multiple School of Rock franchises in Germany. Jim just purchased a(n) ________ franchise arrangement.

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

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