Deck 3: The Franchisor Business Plan

Question 1

A realistic estimate for the cost of legal requirements to begin a franchising system could be:

A)$5,000
B)$10,000
C)$20,000
D)$50,000

Answer 1

C
The legal requirements will generally cost between $15,000-$30,000 to begin a franchising system

Question 2

What is the first step to good site selection?

A)examining a number of sites in terms of their "need" and forecasting demand
B)determining markets in a geographical area with suitable customer demographics
C)selecting the market area with the best combination of demographics in the area
D)determining the appropriate building size and layout

Answer 2

B
The three steps to good site selection are: (1)Determining markets in a geographical area or region with the customer demographics closely associated with existing successful businesses in the same field(2)Selecting the market area with the best combination of demographics in the region or area analyzed,and then studying the specific locations in this area that are most likely to increase sales(3)Examining a number of sites in terms of their "need" for an outlet or store,and forecasting the demand through an appropriate method

Question 3

Which of the following is NOT a component of a properly developed franchisor plan?

A)franchisor's business plan
B)franchisee recruitment package
C)franchise feasibility study
D)franchisee operations manual and success package

Answer 3

C
See components on page 68
While a franchise feasibility study may help an aspiring franchisor,a properly developed franchisor plan has three major components: (1)a franchisor's business plan,(2)a franchisee recruitment package,and (3)a franchisee operations manual and success package

Question 4

Which of the following is Untrue about the policies and procedures of a franchise system?

A)procedures are essentially "set in stone."
B)both policies and procedures can be abused.
C)policies serve as guidelines for employee actions.
D)procedures identify the steps or elements within a process that are considered appropriate for performing assigned tasks.

Question 5

In urban areas,approximately how much of a store's business is done by people who live or work within a five-minute drive or walk of the location?

A)half
B)two thirds
C)one third
D)one fourth

Question 6

Which of the following is often referred to as the franchisee's "bible"?

A)the franchisor's business plan
B)the franchising agreement or contract
C)the PERT chart
D)the operations manual

Question 7

How many phases are included in the Franchise PERT Chart?

A)3
B)4
C)6
D)8

Question 8

The two main reasons for failure in business are:

A)lack of capital and poorly chosen location
B)poorly chosen location and inadequate business plan
C)poor management and lack of capital
D)inadequate business plan and poor management

Question 9

What are the four main areas of taxation one must consider when reporting about a franchise's activity?

A)sales taxes,business taxes,property taxes,employee taxes
B)sales taxes,property taxes,employee taxes,franchisor taxes
C)sales taxes,property taxes,employee taxes,franchisee taxes
D)sales taxes,property taxes,franchisor taxes,franchisee taxes

Question 10

The most important section of the business plan is:

A)The Management Segment
B)The Executive Summary
C)The Marketing Segment
D)The Legal Requirements