The "_______" section of the UFOC contains how disagreements will be resolved. The advantages of franchising include: 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. D. Number of channel members and degree of control. The Federal Trade Commission monitors all of the following activities except. Which of the following could he use to protect his interests?. A. management and training. What are they? A) Franchisor agreement the franchisor still maintains a great deal of control. a. the owner's family stability and relationships. Which of the following is not an element of a tort? Some franchisors provide different levels of support depending on how much the franchisee is willing to pay. Do you think this was a popular tax? E. Single-unit franchises are a very low-cost method of selling. invest money in the operation. B) Calling on existing franchisees Which descriptive statement is NOT one of the legal ways of protecting a trademark? c. Generally, franchise marketing channels are more closely knit (i.e., closer relationships) than conventional channels. This demonstrates which advantage of a small business? T/F, Conducting a thorough due diligence should always be accomplished if purchasing an existing corporation or franchise, but is unnecessary if acquiring a sole proprietorship. C. Nature of product and number of channel members Pick the correct phrase from the following that best characterizes the relationship between franchisors and franchisees. d. goods. What factor generally determines which co-branding method is chosen by a franchisor? a. Which of the following is NOT an element of virtual relationship management in e-business strategy? all of the above. a. A) Type of franchise pay a fee. use of private labels to brand or trademark product or service. d. d. Give the accounting assumption that is most applicable to each of the statements. a, b, and c only. A major reason for success of franchising is In what way is a franchise's control over the business greatly reduced? E) Loss of control, All of the following are selected franchise fees and costs according to the text, except ________. a. franchiser. C) Inclusive franchising This resulted in the passage of the Uniform Franchise Offering Circular (UFOC). Why might co-branding be beneficial for a mature market? Entitles the franchisee to business operational advice. What is the owner's personal net worth? b. When buying a business, you should do all of the following except, A corporation's senior officers decide how much should be paid out in dividends. When buying a small business you need to know all of the following items except: Small businesses have an advantage over large businesses in all of the following areas except, Jimmy and Henry are considering opening a smoke shop. A key question to ask when buying an on-going small business is which of the following? Which characteristic is not considered a positive of franchising? D. In a franchise, one party grants a license to another party to sell a trademarked product or service. If you don't know how you want to be positioned in the marketplace, and don't know the value propositions you uphold, then you will be: positioned in the market-place and educated on that position by your competition. C. Multi-unit franchises require the franchisor to provide greater operational assistance to their franchisees than do they do for single-unit franchises. On-site management In exchange for an ownership share, small businesses receive financing from a group of investors known as Where is Ellis most likely to go for advice and guidance about running the outlet? E. The details of franchise management are vague enabling franchisees to adapt to changing environmental conditions. the owner's reason for selling. d. determining markets in a geographical area with suitable customer demographics. Hobby the cost of replacing an employee. A. Which of the following is true of the risk involved in buying an existing business facing bankruptcy? d. Bill has his own tax preparation and accounting business. a. The _________ has the responsibility for the business location, of establishing the business, and of building the storefront. all of these are reasons it could be beneficial. The "Restrictions on the Sources of Products and Services" section of the UFOC describes _______, what the potential franchisee must purchase from the franchisor and what the franchisee can source independently. The individual who arranges for a dealer to handle a specific product or service under certain mututally agreed upon conditions is known as the _____. b. E) Brand, Subway restaurants can be found ________. Juan has been awarded a franchise in an industry in which the franchisor has licensed him to sell and distribute its product to retailers. Frianchisees are likely to be more successful when the franchisor provides high-quality products and helps with finding locations. The franchise distribution system is composed of approximately _________ franchise business establishments that provide more than 11 million jobs. A) Self-reflection Not coincidentally, these issues have become more prevalent and evident with the advent of Firms selling heavy industrial machinery are most likely to use the franchise model to control product distribution. c. How many personnel are going to remain? The business that represents 99.7 percent of all employers in the United States is a. B) Research D) The community a. True or false: One advantage of buying an existing business instead of a franchise is that an existing business already has an established cash flow. collaboration with suppliers through Internet, NOT: franchisors a. Henry approaches her about operating his own business under the terms above. All of the above. C. Training. inventory Attorneys and CPA firms D. System to network with competing franchises. This is an example o. Craig has $60,000 to invest in a new small business. a. d. E) All of the above, The FDD includes information such as ________. Jack owns a franchise. E. None of the above. The acutal cost of "opening the doors" of a franchise establishment can be as high as $200,000. Which one of the following is not a major question at the onset? franchiser C) Penalty If you decide to purchase a franchise, you will have to pay. Selling a franchise to the franchisee Frieda's Freestyle Skateboards has many customers but is not dominant in its field. b. both of the above. After all of your investigation into a franchise, the final decision should be up to What exactly is to be done in each segment? How much of successful selling consists in simply listening to the prospective buyer? E) All of the above, Products and services in a franchise may not be altered, added, or dropped without ________. The government exercises very little control over sole proprietorships, A business that has the legal rights of a person and may have many owners is a, A business broker is a person who sells homes for a living, Which of the following antitrust legislation laws makes it illegal to discriminate by charging different prices to customers, The FDD contains all of the following information expect, the name and address of at least 200 current franchisees, Unlike regular corporations, an S corporation is not taxed as a business, Advertising fees for franchises are paid directly to the advertisers, An advantage of buying an existing business is that, A disadvantage of buying an existing business is that it may be poorly located. The potential buyer In multi-unit franchisees, franchisees receive permission from the franchisor to own and operate more than one unit at the outset of their relationship, whereas single-unit franchises initially only receive permission to operate a single unit. What advantage of a small business does Bill enjoy? D) Unity b. Freddie's Fenders is seeking a loan from the SBA. symbols and logos. The Franchise Disclosure Document helps the franchise buyer to make a knowledgeable purchase. An understanding of customers buying patterns before the business begins operations. B. The primary administrative costs of administering a franchise program typically include those of: hiring and training salespeople to recruit or solicit prospective franchisees, The recruitment package is part of the franchisor's, initial response to a potential franchisee's inquiry for information about the franchise, The written information provided in the franchise package to a prospective franchisee contains, promotions package and operations materials. d. Repeat the test using the critical value approach. B) Financing assistance B) Designated suppliers c. c. b. Sylvia has an SBA-guaranteed business loan for the average life of such loans. C) Never provide help for start-up A. A(n) _______ _______ is a basic contract generated by a franchisor for all franchisees. a financial investment. income or wealth. c. b. Which of the following is true about the serious prospective franchisee? The two main reasons for failure in business are: NOT: inadequate business plan and poor management. E) All of the above, The formula provided by the franchise does which of the following? planning, persistence, patience, people, profit (pg 136) what are the 3 C. Increased regulatory scrutiny. C. The greatest benefit to franchisors is the marketing assistance they receive from franchisees. Why might it be a good idea for a franchisor to investigate several ASP vendors before choosing one? Offer new products/services in new territories to new customers, One who owns and operates more than one franchise unit is known as a, NOT: Area Developer b. A franchise is a legal agreement. Reviewing personnel of the business about to be purchased is important in order to determine The owner may be in trouble with suppliers. The _____approach indicates the importance of people's awareness of their daily lives for developing new business ideas. A corporation pays taxes both on its income and on the amount it pays out in dividends, it faces very little government regulation. A franchisee that has inconsistent quality or service not only hurts his or her own business but also impacts the brand images of all the other franchisees. c. The planner will want to find the answers to all of the following questions except. b. This is a ___ business. a. How often should financial accounting information be reviewed by management? A potential franchisor is concerned that the franchisees will destroy the reputation of the company and end up hurting his business. d. proven track record. d. The Antitrust Division of the Federal Trade Commission takes legal action against any business it believes has tried to monopolize an industry. d. Juan is most likely a franchisee in the ___ industry. D) All of the above are types of franchising. d. The accountant assigns revenues and expenses to specific years before preparing the financial statements. A) Required Franchisors capitalizing or financing their businesses are generally required to disclose three key financial statements. D. Reduce uncertainty Identify an accurate statement about buying an existing business. An agreement not to compete is also known as Which two factors are especially relevant in the scope and frequency of franchisee evaluations by franchisors? The majority of small businesses are managed by, Hamilton has wanted to start a business of his own since he was a small child. Good cause B. According to Jim Peterson, it is important to know how customers honestly perceive the quality of the product or service offered by the franchise system. How many years will she have to repay the loan? A. Which of the following agencies will most likely arbitrate this dispute? B) Be a concern for a franchisee B) Not required The "right questions" the prospective small business owner should ask about a franchise deal with d. A realistic estimate for the cost of legal requirements to begin a franchising system could be: How many phases are included in the Franchise PERT Chart? Which of the following ratios would be ranked the best? A franchisor's revenue from royalties and selling supplies provide _________ income than that earned from initial franchise fees. The franchisor's responsibilities include providing Which of the following is an advantage to the franchisee? It is structured between single-unit and multi-unit franchises. Business format franchises are prevalent in which of the following businesses? & H_0: \sigma_1^2 \leq \sigma_2^2 \\ c. The accounting records of a company are kept separate from its owners. A) Guarantees brand recognition There are four types of growth opportunities for franchise systems to increase sales and share-of-market within their customer base. d. C) Fixtures Which of the following statements regarding the franchise fee are correct? E. None of the above. the competition in the area. Franchisees benefit from continued franchisor research and development of products and processes. b. B. all of the above, What is the largest source of new business ideas among men? the franchise. C) Franchisor Disclosure Document limits placed on the franchisee regarding what it can do with the product and its production. Debt Service d. disagreements between the two parties have increased and contract disputes are causing many lawsuits. a. c. old-old a. All of the above, Have a seller retain a _____interest in the business. Degree of control and importance of channel members. 100, Which of the following costs add to the cost of franchising? Much franchise litigation has arisen over termination of owners. Darrel's Donuts has been operating quite successfully for two years. Jimmy John's, Which is not a cost of franchising? E. The desired degree of control of franchisees by franchisors is not relevant to the decision by franchisors to use the franchise channel model. As it pertains to the motivation of franchisees, which statement is generally false? d. b. Which of the following are resources that an entrepreneur can typically use to find a business for sale? b. A. "When sales continue to grow but are increasing at a decreasing rate" is associated with which stage of the product life cycle? This is the most common form of franchise channel structure. The term "risk vs. loss" refers to the amount of return for funds invested. B) In convenience stores Dwight has a small business and would like to sell his products overseas. The "________" section of the Uniform Franchise Offering Circular (UFOC) details the ancillary services that are offered by a franchisor. The 2014 Annual Report for Murphy Oil Corporation (see www.murphyoilcorp.com) shows the following numbers of barrels of crude oil produced per day in the United States annually from 2008 through 2014: Develop a bar chart that illustrates these data. E. All of the above statements are accurate. a. The "Trademarks" section of the UFOC details ___________. A franchisor typically provides _______ to develop performance management programs, quality controls methods, forecasting, and purchasing of equipment, which are very valuable services that act as guidelines rather than mandates in deciding on a franchise. Changes in zoning which affect the business. d. B) Friends new-new He works many hours from January through April but in May takes a month-long vacation and the rest of the year works part-time. He wants the business to succeed. A) Themselves According to the text, the most important reason why franchisors adopt franchise channels is: C) Uniformity insurance Ellis owns a Subway franchise. 1- Reduced risk of failure. D) Be proven d. All of these are ways a franchisor makes money; A) The franchisor A leading apparel manufacturing firm in the United States invites applications to establish franchises in Texas. What is the primary disadvantage of owning a franchise experienced by a franchisee? A) Fees and costs There are four generic categories to classify goods and services. have the ability to quickly adapt to change. What are the typical payments paid by a franchisee to a franchisor? d. asset pricing. All of the above. a. 9 A primary consideration for a potential franchisee is that the capital required to become a franchisee will likely be: about the same or potential more for starting a franchise business compared to starting an independent business in the same field. The franchisor owns the trademark and business model. c. the sales package is used by the franchisor to give a prospective franchisee a good sales presentation; the sales playbook helps the salesperson sell to customers. The approach to be used by a franchisee in providing the franchisor's products or services to the customer is called: Composite data about the franchise industry itself suggests which approach to franchising continues to experience strong growth: In 1979, the Federal Trade Commission established Rule 436.1, also known as the Franchise Disclosure Act, for the purpose of: diminishing illegal and unethical practices. Terry's is a. Characteristics of a small business would include all of the following except. TRY: data analyses. Test the following hypotheses at the .05.05.05 level of significance. The ______ is a firm that originates the idea for a business and develops operational methods to run the business. she will work very hard putting in long hours about six days a week, The SBA assists small-business owners entering the world markets by doing all of the following except, offering long term loans to US business owners. NOT: dealing with financial issues such as accounting and finances. d. training and guidance provided by the franchisor. This category of information offers the distinct advantages low cost and quick availability. All franchisees operating under single-unit franchises own and operate one unit. What amount is generally considered adequate? Darrel is considering expanding the business by franchising. Which philosophy of expansion is, as a rule, the best method for franchisors? Wherein the goal of the market-focused business strategy is to identify and supply product/service to discrete segments with promise of strong demand yet allowing for flexibility in meeting demand and where a firm can concentrate its internal resources describes characteristics of which of the following four market-focused business strategies? A sample of 16 items from population 1 has a sample variance s12=5.8s_1^2=5.8s12=5.8 and a sample of 21 items from population 2 has a sample variance s22=2.4s_2^2=2.4s22=2.4. c. Three major reasons that explain why franchisors distribute via franchise channels are: (1) capital advantages, (2) potential to reduce distribution costs, and (3) possible high level of managerial motivation fostered by franchising. And, how much will it cost to implement? Which of the following types of financial ratios measures the ability of the franchise organization to turn sales into profits? The person who sells the franchise is usually required to do all of the following except: c. d. (pg 134) according to Brian Hendricks, what are the 5 "p's" of entrepreneurship. D) Unable Which of the following is a true statement pertaining to single-unit franchises? hurt not only the business at their location but also the image of other locations. NOT: anticipated costs of operation. C) Purchasing power Entrepreneurs tend to work harder and take moderately greater risks than persons working as employees in someone else's firm. When one designs a unique good or service, the individual is said to have used a(n) ____approach to starting the business. should I have right of first-refusal on site selection? c. b. About how much time does it typically take in the United States to establish a business as a legal entity? Which of the following are benefits of purchasing an existing business? What is a realistic number for a sample size when doing market research? all of the above. C) Territory track record of the other franchisees as proof of success new-old, old-old Negotiating a deal to acquire exactly what is required from the operation. The category most franchise systems are in is the one that has focus on product or service qualities or characteristics with prices being a second-level or a lower order concern to the purchaser. Business students at universities can work together to provide management counseling to small businesses in their community. C) Operations E) All of the above, The term "FDD" stands for which of the following? Traits that entrepreneurs tend to have include all but which one of the following? People who own shares of stock in a corporation are the owners of the corporation, The antitrust legislation law that bans false advertising is the, in a partnership, any losses the business incurs will be shared by all the partners. The prospective investor should get as much information as possible on the franchisor. B. Franchisees may pay a fee that is separate from the royalty fee, often called a cooperative advertising fee, to contribute to an individual advertising fund. A) In traditional stand-alone units old-new b. The franchisee is bound by the terms the franchise contract. prepaid expenses b. opportunitites. The initial franchisee vetting usually includes _________. D. The challenges managing a franchise channel are fundamentally the same as those encountered in conventional channels. provide continuing aid and a guidance to the person buying the franchise. A. It has an established cash flow. Operational Control. b. Prior job B. services. one time franchise fee and monthly royalties based on sales. and c. franchisee Milkshake Lending Company is a small privately owned firm providing venture capital to small businesses.
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