With regard to the evaluation of franchisee performance and degree of control: The high degree of control by the franchisor helps to provide a guaranteed, detailed, and regular flow of performance data that benefits both parties. Automotive Ellis owns a Subway franchise. The __________ is the principal governing mechanism for both the franchisor and franchisee. C) Inclusive franchising A(n) _______ _______ is a basic contract generated by a franchisor for all franchisees. Which of the following best describes the industry she operates in? Solved Knowledge Check 01 Which of the following statement Much franchise litigation has arisen over termination of owners. d. What pricing strategy should the firm use? d. The accountant assigns revenues and expenses to specific years before preparing the financial statements. It is not uncommon for a buyer to be faced with a franchise fee of 250,000 to 1,000,000. 7-eleven Inc. There are six major organizational development tasks required of a franchisor to develop from a single unit firm into a growing franchise system. a. Approximately what percentage of food franchises are co-branded units? a. d. Test the following hypotheses at the .05.05.05 level of significance. b. C) Encouraged b. A. Which of the following is an intangible asset? a. C. Training. WebThe purchaser of a franchise is called the franchisor. b. B. What amount is generally considered adequate? Short-term obligations created by the franchisee in buying supplies, materials or services associated with running the business are referred to as: Often considered the most critical financial component of working capital is, NOT: accounts receivable Which of the following statements regarding what franchisors include as part of their package are correct? Match the situations involved in the negotiation process between a franchisor and a franchisee with their likely outcome: The franchisor might negotiate a complete different deal with the granchisee in order to get started with a self-sufficient operator. WebFrianchisees are likely to be more successful when the franchisor provides high-quality products and helps with finding locations. By immersing them in a week-long training session in an actual store, All the following explain why franchising is so widespread EXCEPT. The Consumer Product Safety Act of 1972 sets safety standards for products other than food and drugs. In a franchise, two parties are involved, the franchisee and franchisor. Richard orders some Harley-Davidson Trikes for his inventory. E. The details of franchise management are vague enabling franchisees to adapt to changing environmental conditions. Which of the following ratios would be ranked the best? It takes special knowledge and skills to conduct an effective turnaround. D. Is based on a percentage of the franchisee's gross sales. Which of the following is true of the risk involved in buying an existing business facing bankruptcy? pay a fee. Which of the following activities at the franchisor's headquarters office should be the center of attention? There is a higher likelihood of success. inventory turnover. d. Potential franchisees should evaluate franchisors' operations based __________. d. of dollars instead of units. B. His actions are possible because small businesses. D. Real estate. c. There is no need for legal representation when entering into a franchise agreement. b. According to the text, which of the following is not a consideration when selecting a franchise? What is the primary purpose of information systems in a start-up franchise? D. Limited independence of the franchisee. B. Evaluating franchise opportunities include finding out more about which of the following? market value. Which of the following laws requires lenders to inform consumers about all costs of credit before an agreement is signed? amount to the government independent of his or her Selling a franchise to the franchisee a. What are the four main areas of taxation one must consider when reporting about a franchise's activity? D) Data regarding existing units Low expectations among franchisees The most common form of business ownership in the United States is the corporatio. The way to approach a new business venture is to think up a good or service that is unique. The start-up and ongoing assistance provided by a franchisor guarantees your success. This is the most common form of franchise channel structure. Franchisees that create a poor brand image through bad customer service _________. discloses any predecessor to the current business. a. The advantages of franchising include: The franchisee and franchisor are linked by a bond of voluntary cooperation rather binding contracts. NOT: prospective franchises being recruited into the system. all of the above. Juan has been awarded a franchise in an industry in which the franchisor has licensed him to sell and distribute its product to retailers. The owner may be in trouble with suppliers. it is possible to start a business with limited capital. Traits that entrepreneurs tend to have include all but which one of the following? For Jerry's Automobile Parts Fabricating business to qualify as a small business, it can employ no more than ___ people. Entrepreneurs tend to work harder and take moderately greater risks than persons working as employees in someone else's firm. Business related reasons for selling may include all but which of the following? a. All are costs. b. None of the above, An analysis of the competition should look for ______. Marketing strategy. Perhaps the greatest advantage of buying a franchise, as compared to starting a new business or buying an existing one, is that the franchisor will usually provide both training and guidance to the franchisee. T/F, Franchising is a two-party legal agreement whereby a franchisor is granted the privilege to conduct business as an individual owner according to the methods and terms specified by the franchisee. d. Repeat the test using the critical value approach. asset value. a. c. Which of the following are areas that the potential franchisee may be able to negotiate with the franchisor? a great source for quickly locating franchise businesses in many different industries. the owner's family stability and relationships. d. Is a specialized broker who handles all arrangements for closing a buyout, The purchase price of a business is determined by the negotiation between. A) Fees and costs A) They may be announced or unannounced. Franchising and franchise channels continue to grow dramatically. Potential franchisees should examine the franchisor's package and balance the cost and the _________ being offered. Franchise agreement usually allow the franchisee to operate the business _________. In many instances, products or ingredients in a franchise must be purchased from ________. As it pertains to the scope and importance of franchising, which of the following statements is most accurate? Many franchisors require potential franchisees to work for an established franchisee for a period of time because they _________. Supplier Control. the franchise. a. D. Number of channel members and degree of control. To be a successful leader, Jim Peterson, franchisor and former President of the IFA, believes it is necessary for four factors to exist for a person to be a successful leader. d. As it pertains to the motivation of franchisees, which statement is generally false? E) Very few franchisors do inspections. C. Potential to reduce distribution costs age of the competition's owners. Matilda would like to open an ice cream and sweet treats store but she will need a loan to do so. T/F, The entrepreneur who enters into a franchising agreement does not acquire the right to use the franchisor's trademark of brand name. should I have right of first-refusal on site selection? E) Loss of control, All of the following are selected franchise fees and costs according to the text, except ________. d. If you are looking to start a business that is creative and is not controlled by others, then franchising is your best option. Which of the following organizations can assist him? A) Self-reflection The franchisor licenses its trademarked products to franchisees. Is it up to date? The Franchise Disclosure Document helps the franchise buyer to make a knowledgeable purchase. Which of the following businesses would most likely be included in the production industry? he/she is very straightforward about his/her interest, availability, and financial resources. health care A) Themselves C) Franchisor Disclosure Document A. Which of the following is often referred to as the franchisee's "bible"? equipment. D. Reduce uncertainty Bill has his own tax preparation and accounting business. Externally dedicated to the market, yet internally focused on production, seeking to produce high-volume or high-value product/service while carefully examining any new opportunities for costs/benefits in relation to known strengths of the firm, is a description of which one of the market-focused business strategies identified below. Why is the owner selling? E) None of the above is a type of franchising. Which of the following is not a key question a prospective buyer needs to ask in buying a business? Where should the business be located? The majority of small businesses are managed by, Hamilton has wanted to start a business of his own since he was a small child. D. The challenges managing a franchise channel are fundamentally the same as those encountered in conventional channels. All of the above statements are accurate. D) Be proven In the United States, ___ account(s) for 97.5 percent of all identified exporters and produce(s) 31 percent of export value. Which one below fits the description of----goods or services that are frequently purchased, usually are low-to- competitively priced, and staples, emergency or impulse buys. He is considering applying to small firms because he knows that small businesses have traditionally added _____ new jobs to the economy. a. Prior job machinery. b. new-new a. A. Sarah has opened her own cosmetology business in a small shopping center with a lot of foot traffic. Franchisors often determine a franchisee's likelihood of success by looking at two things. D. Uniform Code of Justice (UCJ) NOT: asset utilization for the business According to the text, the most important reason why franchisors adopt franchise channels is: loss of freedom and control as franchise system grows. Decide whether the following statement makes sense or not Explain your reason. Which of the following is NOT an element of virtual relationship management in e-business strategy? Insurance d. legal and professional fees management and training. A. A franchise is a business that markets a product or service developed by a franchisor, typically in the manner specified by the franchisor. f(t)=t2t+2. to identify factors which may pose major threats to or provide significant opportunities for the franchise system. d. When purchasing an existing business, the prospective owner should conduct an assessment of the current group of employees. B) Calling on existing franchisees C. Multi-unit franchises require the franchisor to provide greater operational assistance to their franchisees than do they do for single-unit franchises. E) Employees, A franchisor's record of success can ________. True or false: A disadvantage of buying an existing business is that operating processes and policies have already been established. Which of the following are benefits of purchasing a franchise? The downsides for franchisees participating in franchise channels include all of the following except: Which of the following statements is true regarding, business format franchises? Henry approaches her about operating his own business under the terms above. True or false: Individual thinking they were buying franchise that gave them an opportunity for success found that they had paid for what amounted to little more than a name. The reason franchises have been a popular form of business is due to ___________. If you decide to purchase a franchise, you will have to pay. buying a new business a. A wholesaler purchases products in quantity from _____ and then resells them to retailers. D) In military bases d. Uniqueness in a product or service can be demonstrated through a new-new approach or c. A) Required 3- Customers already know you exist. Which of the following is a true statement pertaining to single-unit franchises? Franchisees have the option of using the logo and symbols of the franchisor. Which of the following could he use to protect his interests?. Which is not a start-up expense? Pay for all physical assets (e.g., equipment and building), needed to operate the franchise. d. all of the above, The UFOC contains how many sections: new-old. A lawyer How many years will she have to repay the loan? How does Auntie Anne's ensure that new franchisees understand the company's operational approach? a. If a franchise system is struggling, not achieving long-term success. Will the business's mission and vision change?