Exam 4: Franchising and Buyouts

Mohammed is meeting with a representative of GHI, a franchisor.He has received information about the franchisor's finances, experience, size and involvement in litigation.Mohammed has been given:

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(Multiple Choice)

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Question 1

Correct Answer:

Verified

A franchising strategy whereby a single franchisee owns more than one unit in a given area is typically referred to as an area developer strategy.

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(True/False)

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Question 2

Correct Answer:

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True

Why is it important for a new franchisee to follow the business plan detailed in the operations manual?

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(Essay)

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Question 3

Correct Answer:

Verified

Following the path laid out in the manual helps the owner avoid mistakes that often occur with a start-up business.The franchisee should use the manual to channel his energy toward the most productive activities leading to survival and profitability.Customers expect to find the same products and quality regardless of the location of the franchise.Following the operations manual will assure every franchise lives up to the customers' expectations.

The franchise contract Pamela signed with DEF Company specified she would have an exclusive sales territory.While the contract was still in force, DEF opened a corporate-owned store within her territory.DEF is guilty of:

(Multiple Choice)

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Question 4

Joe is interested in opening a Burger-Place franchise.Burger-Place requires up-front payment of R650 000.This amount represents:

(Multiple Choice)

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Question 5

In what way is a franchisee's control over the business greatly reduced?

(Multiple Choice)

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Question 6

Mandla was so successful with his Sweets from Heaven franchise that he opened several other Sweets from Heaven locations.Mandla could best be described as:

(Multiple Choice)

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Question 7

The seller of an existing business placed a high value on his experienced employees.The buyer should be wary of this because:

(Multiple Choice)

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Question 8

Zelda reports only half the cash from the vending machines on her cash flow statement and income tax returns.Her purpose in doing so is:

(Multiple Choice)

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Question 9

Individuals or organisations that possess the legal right to open multiple outlets in a given area are referred to as

(Multiple Choice)

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Question 10

A disadvantage of franchising is:

(Multiple Choice)

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Question 11

Business format franchising is best illustrated by the system offered by: a.Goodyear Tyres. b.First National Bank. c.KFC. d.Mr Price Sport.

(Short Answer)

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Question 12

Anna has been granted the right to conduct business according to specified methods and terms of another party.Anna is a:

(Multiple Choice)

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Question 13

Spur Corporation operates several different restaurant franchises including Spur Steak Ranches, RocoMamas, Captain DoRegos, and several others.Spur Corporation has its own corporate structure and shareholders.This corporation is an example of:

(Multiple Choice)

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Question 14

Identify and discuss some of the negative aspects associated with franchises.

(Essay)

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Question 15

Susan is considering buying the local franchisee of Pots-R-Us.The owners would probably state this reason for selling when in actuality the other three reasons may be more likely:

(Multiple Choice)

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Question 16

In general obtaining finance is easier if the franchising organisation is registered in South Africa with the Franchising Association of South Africa.

(True/False)

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Question 17

Besides the up-front money required of a franchisee, Joe will have to pay building costs and purchase inventory and equipment.This type of expense is called:

(Multiple Choice)

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Question 18

The buyer of an existing business typically acquires its personnel, inventories, physical facilities, established banking connections and on-going relationships with trade suppliers.

(True/False)

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Question 19

If a franchisor is guilty of encroachment of a franchisee, which agreement is it most likely to be in violation of?

(Multiple Choice)

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Question 20

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Exam 4: Franchising and Buyouts

Mohammed is meeting with a representative of GHI, a franchisor.He has received information about the franchisor's finances, experience, size and involvement in litigation.Mohammed has been given:

A franchising strategy whereby a single franchisee owns more than one unit in a given area is typically referred to as an area developer strategy.

Why is it important for a new franchisee to follow the business plan detailed in the operations manual?

The franchise contract Pamela signed with DEF Company specified she would have an exclusive sales territory.While the contract was still in force, DEF opened a corporate-owned store within her territory.DEF is guilty of:

Joe is interested in opening a Burger-Place franchise.Burger-Place requires up-front payment of R650 000.This amount represents:

In what way is a franchisee's control over the business greatly reduced?

Mandla was so successful with his Sweets from Heaven franchise that he opened several other Sweets from Heaven locations.Mandla could best be described as:

The seller of an existing business placed a high value on his experienced employees.The buyer should be wary of this because:

Zelda reports only half the cash from the vending machines on her cash flow statement and income tax returns.Her purpose in doing so is:

Individuals or organisations that possess the legal right to open multiple outlets in a given area are referred to as

A disadvantage of franchising is:

Business format franchising is best illustrated by the system offered by: a.Goodyear Tyres. b.First National Bank. c.KFC. d.Mr Price Sport.

Anna has been granted the right to conduct business according to specified methods and terms of another party.Anna is a:

Spur Corporation operates several different restaurant franchises including Spur Steak Ranches, RocoMamas, Captain DoRegos, and several others.Spur Corporation has its own corporate structure and shareholders.This corporation is an example of:

Identify and discuss some of the negative aspects associated with franchises.

Susan is considering buying the local franchisee of Pots-R-Us.The owners would probably state this reason for selling when in actuality the other three reasons may be more likely:

In general obtaining finance is easier if the franchising organisation is registered in South Africa with the Franchising Association of South Africa.

Besides the up-front money required of a franchisee, Joe will have to pay building costs and purchase inventory and equipment.This type of expense is called:

The buyer of an existing business typically acquires its personnel, inventories, physical facilities, established banking connections and on-going relationships with trade suppliers.

If a franchisor is guilty of encroachment of a franchisee, which agreement is it most likely to be in violation of?​

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If a franchisor is guilty of encroachment of a franchisee, which agreement is it most likely to be in violation of?