Question 1

Franchisors make decisions based on what is best for

Accepted Answer

A)  franchisors.
B)  franchisees.
C)  the total business.
D)  none of these. C

Question 2

A(n)________ usually contains clauses requiring the purchase of supplies from a franchisor, the displaying of marketing material, and the payment of fees that are based upon the sales of a branch operation.

Accepted Answer

franchise agreement

Question 3

A franchise agreement is a basic contract that usually contains clauses that require the purchase of supplies.

Accepted Answer

A) True 
 B)False  True

Question 4

Items covered in the Uniform Franchise Offering Circular include all of the following EXCEPT

Accepted Answer

A)  litigation.
B)  bankruptcy.
C)  investment requirements.
D)  marketing goals.

Question 5

Business brokers are bankers who invest in financing small businesses.

Accepted Answer

A) True 
 B)False

Question 6

A franchisor should provide a standard, well-known product.

Accepted Answer

A) True 
 B)False

Question 7

An existing business has an established ________ flow that the owner is offering to sell to a buyer.

Accepted Answer

The answer of An existing business has an established ________...

Question 8

A franchisor provides both the operational systems and the monetary techniques to run the business.

Accepted Answer

A) True 
 B)False

Question 9

During the transition period of the sale of an existing business, the new owner should spend significant time being visible in the business, talking with employees, making suggestions, and doing some of the more menial work.

Accepted Answer

A) True 
 B)False

Question 10

The relationship between a franchisee and a franchisor is like a marriage.

Accepted Answer

A) True 
 B)False

Question 11

What can a potential franchisee learn from current franchisees when researching the purchase of that franchise?

Accepted Answer

The answer of What can a potential franchisee learn from...

Question 12

Every sale between a franchisor and a franchisee must be governed by the United Franchise Act of 1987.

Accepted Answer

A) True 
 B)False

Question 13

When a franchisee delivers inconsistent quality, it hurts the company and the ________.

Accepted Answer

A)  franchisees
B)  business brokers
C)  licensers
D)  bankers

Question 14

A franchisor benefits by enabling a rapid expansion of his or her business, while maximizing the funds invested in that expansion.

Accepted Answer

A) True 
 B)False

Question 15

During the transition period following the sale of an existing business, which of the following tasks needs to be completed?

Accepted Answer

A)  Meet and discuss the transition with every member of the current staff.
B)  Spend significant time being visible in the new operation.
C)  Implement new metrics.
D)  All of these

Question 16

Once negotiations for the sale and purchase of an existing business are complete and all contracts are signed, there will be a transition period.

Accepted Answer

A) True 
 B)False

Question 17

For a potential franchisee, depending on a franchisor for market analysis is the best tactics to understand a market.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is NOT listed in the book as a good source of information for finding an existing business to purchase?

Accepted Answer

A)  Bankruptcy filings
B)  Trade associations
C)  Attorneys and CPA firms
D)  Bankers

Question 19

A leading apparel manufacturing firm in the United States invites applications to establish franchises in Texas.John, an entrepreneur, approaches the firm with a proposal.After doing routine background checks, the firm permits John to open a branch of the firm in a given area, use the firm's name, and operate a business within the guidelines of an agreement.In this scenario, John is a ________.

Accepted Answer

A)  franchisor
B)  franchisee
C)  franchise
D)  licensor

Question 20

In 2016, the International Franchise Association reported that franchises made up almost 900,000 establishments in the United States, providing almost 9 million direct jobs.

Accepted Answer

A) True 
 B)False

Exam 14: Franchising and Purchasing an Existing Business

Franchisors make decisions based on what is best for

A(n)________ usually contains clauses requiring the purchase of supplies from a franchisor, the displaying of marketing material, and the payment of fees that are based upon the sales of a branch operation.

A franchise agreement is a basic contract that usually contains clauses that require the purchase of supplies.

Items covered in the Uniform Franchise Offering Circular include all of the following EXCEPT

Business brokers are bankers who invest in financing small businesses.

A franchisor should provide a standard, well-known product.

An existing business has an established ________ flow that the owner is offering to sell to a buyer.

A franchisor provides both the operational systems and the monetary techniques to run the business.

During the transition period of the sale of an existing business, the new owner should spend significant time being visible in the business, talking with employees, making suggestions, and doing some of the more menial work.

The relationship between a franchisee and a franchisor is like a marriage.

What can a potential franchisee learn from current franchisees when researching the purchase of that franchise?

Every sale between a franchisor and a franchisee must be governed by the United Franchise Act of 1987.

When a franchisee delivers inconsistent quality, it hurts the company and the ________.

A franchisor benefits by enabling a rapid expansion of his or her business, while maximizing the funds invested in that expansion.

During the transition period following the sale of an existing business, which of the following tasks needs to be completed?

Once negotiations for the sale and purchase of an existing business are complete and all contracts are signed, there will be a transition period.

For a potential franchisee, depending on a franchisor for market analysis is the best tactics to understand a market.

Which of the following is NOT listed in the book as a good source of information for finding an existing business to purchase?

In 2016, the International Franchise Association reported that franchises made up almost 900,000 establishments in the United States, providing almost 9 million direct jobs.