Deck 18: Managing the Franchisee Business Stage Six: the Franchiserfranchisee Relationship

Question 1

Which of the following is not usually a component of the Franchise Defense Manual?

A)written records of all promises made by the franchisor
B)sale policies and positions of the franchisor
C)pricing policies
D)all of the above should be a part of the Franchise Defense Manual

Answer 1

D
See franchise defense manual

Question 2

Among the actions a franchisor may not engage in the following except:

A)requiring a franchisee to buy a product(s)in order to acquire the product the franchisee wants to purchase
B)mandating the price / a franchisee must charge customers for a product
C)promote a nation-wide sales promotion for products/services sold by franchisees
D)only provide sales and financial projections in a more understandable format than that provided for by the FTC Earnings Claim Document

Answer 2

C
See text for explanation and example

Question 3

Horizontal territorial restrictions

A)are legal and appropriate agreements for franchisees
B)enhance competition among firms
C)involves competitors selling similar products grouping together and excluding a third part
D)involves a relationship between the franchisor and franchisee

Answer 3

C
See discussion in chapter on territory rights and restrictions.

Question 4

Typically the inequality of bargaining power between franchisor's and franchisees

A)favors the franchisee
B)favors the franchisor
C)is mitigated by financial resources of the franchisee
D)is a myth

Question 5

As stated in the text,all of these items are among the ten most common legal problems of franchisees except:

A)sharing advertising costs
B)minimum performance requirements
C)fees for support services
D)correct information being provided to the IRS

Question 6

Family-owned and/or controlled businesses

A)usually continue to exist over two and sometimes three generations
B)usually succeeds ten or more years
C)account for a clear majority of all incorporated firms in the United States
D)generate more than 80% of U.S.GDP

Question 7

Which of the following is one of the four principles of coordination that promote effective work groups?

A)coordination is best accomplished through electronic means such as e-mail,electronic calendars,etc.
B)coordination must address all factors within any phase of any endeavor
C)coordination should occur at most once a week
D)coordination is only necessary in the beginning and at the end of a project

Question 8

All of the following are characteristics of franchisees without legal problems except:

A)they are involved in their first business undertaking
B)they have legal counsel review the franchising agreement
C)they have conducted an independent market survey before purchasing a franchise
D)they request appropriate modifications to standard agreements

Question 9

Which of the following does not shape the management philosophy of top management in a franchise system according to the text?

A)the level of profits of the franchise system
B)the values and experiences of the owners
C)economic influences
D)technological influences

Question 10

Which of the following is not typically a franchisee "right" granted in the written franchising agreement?

A)right to transfer or sell the business
B)right to relocate within a designated sales area
C)right to develop and sell new products or services
D)fair and equitable performance standards