Question 1

An individual who is team oriented is typically a good candidate to be a franchisee.

Accepted Answer

A) True 
 B)False

Question 2

In regard to international franchising, under a(n)  ________, the U.S. franchisor grants the rights to an individual or company (the developer)  to develop multiple franchised businesses within a country or territory.

Accepted Answer

A)   indirect franchise agreement
B)   global franchise agreement
C)   concurrent franchise agreement
D)   direct franchise agreement
E)   express franchise agreement

Question 3

According to the textbook, in 2007 over ________ individual franchise outlets were operating in the United States.

Accepted Answer

A)   510,000
B)   765,000
C)   880,000
D)   1.3 million
E)   2.0 million

Question 4

A business format franchise typically connects a single manufacturer with a network of dealers or distributors.

Accepted Answer

A) True 
 B)False

Question 5

A(n)  ________ involves the sale of a single franchise for a specific location.

Accepted Answer

A)   individual franchise agreement
B)   one-of-a-kind franchise agreement
C)   pinpoint franchise agreement
D)   specific franchise agreement
E)   precise franchise agreement

Question 6

International opportunities for franchising are becoming:

Accepted Answer

A)   less prevalent
B)   neither more nor less prevalent
C)   more prevalent for product and trademark franchise systems and less prevalent for business format franchise systems
D)   more prevalent
E)   less prevalent for product and trademark franchise systems and more prevalent for business format franchise systems

Question 7

How can a person tell if franchising is right for them?

Accepted Answer

Purchasing a franchise should be weighed...

Question 8

The business format franchise is a more popular approach to franchising than the product and trademark franchise.

Accepted Answer

A) True 
 B)False

Question 9

What are the primary advantages and disadvantages to establishing a franchise system (from the franchisor's point of view)?

Accepted Answer

There are two primary advantages to fran...

Question 10

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

Accepted Answer

A product and trademark franchise is an ...

Question 11

Despite its advantages, franchising is not a popular form of business growth.

Accepted Answer

A) True 
 B)False

Question 12

The Franchise Disclosure Document is accepted in (or by) :

Accepted Answer

A)   11 states
B)   all 50 states, all of Canada, and parts of Mexico
C)   39 states and all of Canada
D)   all 50 states and parts of Canada
E)   all nations participating in the North America Free Trade Agreement

Question 13

In the majority of cases, a franchisee pays the franchisor a royalty based on:

Accepted Answer

A)   a predetermined fixed weekly or monthly amount
B)   weekly or monthly net income
C)   the size of the franchise outlet
D)   weekly or monthly gross income
E)   the age of the franchise outlet

Question 14

Which of the following statements is incorrect regarding the franchisor-franchisee relationship?

Accepted Answer

A)   A franchisee may be charged a fee for additional training.
B)   Some franchisors require a new franchisee to pay a "grand opening" fee.
C)   Franchisees are often required to pay into a national or regional advertising fund.
D)   Weekly or monthly royalty fees are usually around 2% of net income.
E)   Franchisees may have to pay a monthly royalty even if the business is losing money.

Question 15

Franchisors are required by law to disclose all their costs in a document called the:

Accepted Answer

A)   Fairness in Franchising Certificate
B)   Consistent Franchise Offering Code
C)   Standardized Franchise Code
D)   Franchise Disclosure Document
E)   Franchise Code of Conduct

Question 16

The people who buy franchises from master franchisees are typically called employee-franchisees.

Accepted Answer

A) True 
 B)False

Question 17

The majority of franchisors are highly ethical individuals who are interested only in making a fair return on their investment.

Accepted Answer

A) True 
 B)False

Question 18

Franchising is appropriate when:

Accepted Answer

A)   a firm's business methods are not polished, it has a desire to grow, and it is trying to commercialize a technology product
B)   a firm has a strong trademark, a desire to grow, and a well-designed business method
C)   a firm is trying to commercialize a technology product, it is well-funded, and it has a desire to grow
D)   a firm has a weak trademark, it is well-funded, and it has a desire to grow
E)   a firm has a desire to grow, it has a well-designed business method, and it is well funded

Question 19

An area franchise agreement allows a franchisee to own and operate a specific number of outlets in a particular geographic area.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following companies would not be suitable for franchising?

Accepted Answer

A)   College Nannies & Tutors
B)   Smoothie King
C)   McDonald's
D)   H&R Block
E)   Home Depot

Exam 15: Franchising

The business format franchise is a more popular approach to franchising than the product and trademark franchise.

Correct AnswerverifiedShow Answer

Which of the following companies would not be suitable for franchising?

Correct AnswerverifiedShow Answer

A(n) ________ involves the sale of a single franchise for a specific location.

Correct AnswerverifiedShow Answer

Franchisors are required by law to disclose all their costs in a document called the:

Correct AnswerverifiedShow Answer

What are the primary advantages and disadvantages to establishing a franchise system (from the franchisor's point of view)?

Correct AnswerverifiedThere are two primary advantages to fran...View AnswerShow Answer

The majority of franchisors are highly ethical individuals who are interested only in making a fair return on their investment.

Correct AnswerverifiedShow Answer

An area franchise agreement allows a franchisee to own and operate a specific number of outlets in a particular geographic area.

Correct AnswerverifiedShow Answer

Despite its advantages, franchising is not a popular form of business growth.

Correct AnswerverifiedShow Answer

International opportunities for franchising are becoming:

Correct AnswerverifiedShow Answer

How can a person tell if franchising is right for them?

Correct AnswerverifiedPurchasing a franchise should be weighed...View AnswerShow Answer

A business format franchise typically connects a single manufacturer with a network of dealers or distributors.

Correct AnswerverifiedShow Answer

The people who buy franchises from master franchisees are typically called employee-franchisees.

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect regarding the franchisor-franchisee relationship?

Correct AnswerverifiedShow Answer

The Franchise Disclosure Document is accepted in (or by) :

Correct AnswerverifiedShow Answer

Franchising is appropriate when:

Correct AnswerverifiedShow Answer

An individual who is team oriented is typically a good candidate to be a franchisee.

Correct AnswerverifiedShow Answer

In the majority of cases, a franchisee pays the franchisor a royalty based on:

Correct AnswerverifiedShow Answer

In regard to international franchising, under a(n) ________, the U.S. franchisor grants the rights to an individual or company (the developer) to develop multiple franchised businesses within a country or territory.

Correct AnswerverifiedShow Answer

According to the textbook, in 2007 over ________ individual franchise outlets were operating in the United States.

Correct AnswerverifiedShow Answer

What is the difference between a product and trademark franchise and a business format franchise? Which type of franchise is most common for entrepreneurial firms?

Correct AnswerverifiedA product and trademark franchise is an ...View AnswerShow Answer

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There are two primary advantages to fran...
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Purchasing a franchise should be weighed...
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A product and trademark franchise is an ...
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