Question 1

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  True

Question 2

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 D

Question 3

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

Accepted Answer

A product and trademark franchise is an arrangement in which the franchisor grants to the franchisee the right to buy its products and use its trade name.This approach typically connects a single manufacturer with a network of dealers or distributors.For example,General Motors has established a network of dealers that sell GM cars and use the GM trademark in their advertising and promotions.Other examples of product and trademark franchise systems include agricultural machinery dealers,soft drink bottlers,and beer distributorships.In a business format franchise,which is by far the more popular approach to franchising for entrepreneurial firms,the franchisor provides a formula for doing business to the franchisee along with training,advertising,and other forms of assistance.Fast-food restaurants and convenience stores are well-known examples of business format franchises.

Question 4

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 5

In addition to FTC disclosure requirements, ________ states have laws providing additional protection to franchisees.

Accepted Answer

A)  6 
B)  10 
C)  15 
D)  33 
E)  47 
A)  6 
B)  10 
C)  15 
D)  33 
E)  47

Question 6

________ is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to other business in exchange for an initial franchise fee and an ongoing royalty.

Accepted Answer

A)  Licensing 
B)  Joint Venturing 
C)  Contracting 
D)  Franchising 
E)  Sub-Contracting 
A)  Licensing 
B)  Joint Venturing 
C)  Contracting 
D)  Franchising 
E)  Sub-Contracting

Question 7

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 8

Which of the following statements is incorrect regarding product and trademark franchises?

Accepted Answer

A)  Rather than obtaining a royalty or franchise fee, the product and trademark franchisor obtains the majority of its income from selling its products to its dealers or distributors at a markup. 
B)  Ford Motors establishes product trademark rather than business format franchises. 
C)  Product trademark franchises are more popular than business format franchises. 
D)  Product and trademark franchisees are typically permitted to operate in a fairly autonomous manner. 
E)  A product trademark franchise typically connects a single manufacturer with a network of dealers or distributors. 
A)  Rather than obtaining a royalty or franchise fee, the product and trademark franchisor obtains the majority of its income from selling its products to its dealers or distributors at a markup. 
B)  Ford Motors establishes product trademark rather than business format franchises. 
C)  Product trademark franchises are more popular than business format franchises. 
D)  Product and trademark franchisees are typically permitted to operate in a fairly autonomous manner. 
E)  A product trademark franchise typically connects a single manufacturer with a network of dealers or distributors.

Question 9

According to our textbook, which of the following is not a quality to look for in prospective franchisees?

Accepted Answer

A)  Individual, rather than team-oriented 
B)  Ability to follow instructions 
C)  Experience in the industry in which the franchisee operates 
D)  Ability to operate with minimal supervision 
E)  Adequate financial resources and a good credit history 
A)  Individual, rather than team-oriented 
B)  Ability to follow instructions 
C)  Experience in the industry in which the franchisee operates 
D)  Ability to operate with minimal supervision 
E)  Adequate financial resources and a good credit history

Question 10

While franchise agreements vary, each agreement typically contains the purchase agreement and the ________ agreement.

Accepted Answer

A)  legal 
B)  procurement 
C)  conversion 
D)  sell 
E)  franchise 
A)  legal 
B)  procurement 
C)  conversion 
D)  sell 
E)  franchise

Question 11

According to a concept called ________ theory, it is more effective for the units of a growing chain to be run by franchisees than by managers because managers are usually paid a salary and may not be as committed to the success of their individual units as franchisees, who are in effect the owners of the units they manage.

Accepted Answer

A)  incentive 
B)  stimulus 
C)  agency 
D)  stewardship 
E)  motivation 
A)  incentive 
B)  stimulus 
C)  agency 
D)  stewardship 
E)  motivation

Question 12

Melanie Jacobs recently opened a Papa John's franchise. So far, she is very satisfied with Papa John's because in exchange for an initial franchise fee and an ongoing royalty payment, Papa John's has provided Melanie a formula for doing business along with training, advertising, and other forms of assistance. Melanie purchased a ________ franchise.

Accepted Answer

A)  business extension 
B)  formula driven 
C)  sales extension 
D)  product and trademark 
E)  business format 
A)  business extension 
B)  formula driven 
C)  sales extension 
D)  product and trademark 
E)  business format

Question 13

General Motors operates a ________ franchise system.

Accepted Answer

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

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A prospective franchisee should fully understand all the information contained in the Franchise Disclosure Document before a franchise agreement is signed.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a company that is suitable for franchising but has a relatively small number of franchise outlets?

Accepted Answer

A)  Anytime Fitness 
B)  Hampton Inn Hotels 
C)  McDonalds 
D)  Starbucks 
E)  The UPS Store 
A)  Anytime Fitness 
B)  Hampton Inn Hotels 
C)  McDonalds 
D)  Starbucks 
E)  The UPS Store

Question 17

Jenna Page recently entered into an agreement with Anytime Fitness to open five Anytime Fitness franchises. According to the agreement that Jenna entered into, she has the right to open up to five Anytime Fitness franchises within the city limits of Lawrence, Kansas. Jenna has entered into a(n) ________ franchise agreement,

Accepted Answer

A)  individual 
B)  district 
C)  locality 
D)  area 
E)  city 
A)  individual 
B)  district 
C)  locality 
D)  area 
E)  city

Question 18

Franchising is a form of business organization in which a firm that already has a successful product or service licenses its trademark and method of doing business to other businesses in exchange for an initial franchise fee and an ongoing royalty.

Accepted Answer

A) True 
 B)False

Question 19

A multiple-unit franchisee is a person who owns ________.

Accepted Answer

A)  franchise outlets from more than one franchisor 
B)  both product and trademark franchise outlets and business format franchise outlets 
C)  and operates more than one outlet of the same franchisor 
D)  more than 10 franchise outlets 
E)  franchise units from multiple franchisors 
A)  franchise outlets from more than one franchisor 
B)  both product and trademark franchise outlets and business format franchise outlets 
C)  and operates more than one outlet of the same franchisor 
D)  more than 10 franchise outlets 
E)  franchise units from multiple franchisors

Question 20

Which of the following is not an advantage of buying a franchise?

Accepted Answer

A)  A proven product or service within an established system 
B)  Franchisor ongoing support 
C)  Availability of financing 
D)  Potential for business growth 
E)  Duration and nature of the commitment 
A)  A proven product or service within an established system 
B)  Franchisor ongoing support 
C)  Availability of financing 
D)  Potential for business growth 
E)  Duration and nature of the commitment

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.

International opportunities for franchising are becoming ________.

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

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

In addition to FTC disclosure requirements, ________ states have laws providing additional protection to franchisees.

________ is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to other business in exchange for an initial franchise fee and an ongoing royalty.

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.

Which of the following statements is incorrect regarding product and trademark franchises?

According to our textbook, which of the following is not a quality to look for in prospective franchisees?

While franchise agreements vary, each agreement typically contains the purchase agreement and the ________ agreement.

General Motors operates a ________ franchise system.

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

A prospective franchisee should fully understand all the information contained in the Franchise Disclosure Document before a franchise agreement is signed.

Which of the following is a company that is suitable for franchising but has a relatively small number of franchise outlets?

Franchising is a form of business organization in which a firm that already has a successful product or service licenses its trademark and method of doing business to other businesses in exchange for an initial franchise fee and an ongoing royalty.

A multiple-unit franchisee is a person who owns ________.

Which of the following is not an advantage of buying a franchise?

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 Venture's 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

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.

International opportunities for franchising are becoming ________.

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

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

In addition to FTC disclosure requirements, ________ states have laws providing additional protection to franchisees.

________ is a form of business ownership in which a firm that already has a successful product or service licenses its trademark and method of doing business to other business in exchange for an initial franchise fee and an ongoing royalty.

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.

Which of the following statements is incorrect regarding product and trademark franchises?

According to our textbook, which of the following is not a quality to look for in prospective franchisees?

While franchise agreements vary, each agreement typically contains the purchase agreement and the ________ agreement.

General Motors operates a ________ franchise system.

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

A prospective franchisee should fully understand all the information contained in the Franchise Disclosure Document before a franchise agreement is signed.

Which of the following is a company that is suitable for franchising but has a relatively small number of franchise outlets?

Franchising is a form of business organization in which a firm that already has a successful product or service licenses its trademark and method of doing business to other businesses in exchange for an initial franchise fee and an ongoing royalty.

A multiple-unit franchisee is a person who owns ________.

Which of the following is not an advantage of buying a franchise?

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 Venture's 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