Deck 7: The Purchase Alternative: How Do I Buy or Buy Into an Existing Business

Question 1

The most popular franchise arrangement is:

A) single-unit.
B) multi-unit.
C) multi-brand.
D) master franchise.

Answer 1

A

Question 2

Which of the following would be an example of a Business Format franchise?

A) Petro Canada.
B) Tim Horton's.
C) Toyota.
D) Popsicle.

Answer 2

B

Question 3

Most of the magazines and other publications about franchising:

A) are critical of the industry.
B) forbid advertising of specific franchises.
C) are published by franchisor associations.
D) are published by franchisee associations.

Answer 3

C

Question 4

With "floor plan" financing, title to the product in the franchisee's inventory is:

A) held by the franchisee.
B) held by a third party.
C) held by the franchisor.
D) there is no title to the product.

Question 5

The ability to innovate is an important characteristic for a franchisee.

Question 6

Canada tends to have stricter franchising regulations than most of the US.

Question 7

Major franchisors tend to be highly negotiable over contract details.

Question 8

Franchisors such as automobile manufacturers can dictate the prices charged by their franchisees.

Question 9

The biggest advantage of owning a franchise over an independent firm is likely:

A) training provided by the franchisor.
B) brand recognition.
C) advertising.
D) marketing research.

Question 10

Dealership franchising tends to give the franchisee more freedom than business format franchising.

Question 11

The Franchisor is the buyer of a complete method of doing business.

Question 12

Multi-level marketers usually:

A) work from their homes.
B) sell to consumers.
C) receive commissions from the sales of their recruits.
D) all of the above.

Question 13

The right to produce and sell the franchisor's product is called:

A) licensing.
B) dealership.
C) conversion franchising.
D) none of the above.

Question 14

Buying an existing franchise is legally simpler than buying a new one.

Question 15

The code of the Canadian Franchise Association gives franchisees:

A) freedom to form and join associations.
B) the right to see the financial statements of the franchisor.
C) the right to a full refund if dissatisfied.
D) all of the above.

Question 16

Most Multi-level Marketers make well-above-average incomes.

Question 17

The owner of a territory franchise has the right to sell franchises to others.

Question 18

Pyramid Selling is an illegal form of Multi-level Marketing.

Question 19

The cost of a franchise may include:

A) royalty payments.
B) advertising expenditures.
C) the franchise fee.
D) all of the above.

Question 20

On average, buying a franchise:

A) is the lowest risk start-up method.
B) has the same risk as starting a brand new business.
C) has the same risk as buying an existing independent firm.
D) is risk-free.

Question 21

When the same franchisee owns two different franchise brands at the same site, this is called franchising.

Question 22

Explain the major provisions of existing or pending franchise legislation. Explain the growing trend for disclosure requirements. .

Question 23

Changing an independent small business into a franchise outlet is referred to as franchising.

Question 24

In three or four sentences discuss your personality and skills explaining why you would (or would not) make a good franchisee.

Question 25

The law that restricts national price setting is known as the federal Act.

Question 26

Briefly explain the major advantages of buying a franchise over other start-up methods.

Question 27

Outline a typical process of buying a franchise from the first contact with the franchisor to the final signing of the contract. Note how the process favours the franchisor.

Question 28

Assets against which there are no liens are referred to as .

Question 29

An arrangement where a franchisee has the right to sell franchises to others within a particular territory is called a franchise.