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Exam 4: Franchising and the Entrepreneur

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Question 41

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When a franchisee buys a franchise,he/she is purchasing the expertise and the business experience of the franchisor.

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verified

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Question 42

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Having an attorney review and evaluate a franchise contract really is unnecessary since the FTC requires all franchisers to offer a "standard" franchise contract.

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Question 43

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________ franchising involves providing the franchisee with a complete business system--the established name,the building layout and design,accounting systems,etc.

A master franchise gives the franchisee the right to combine two distinct franchises under one roof.

________ franchising involves the owner of an existing business becoming a franchisee to gain the advantage of name recognition.

Although franchising is the fastest growing segment of small business,it has drawbacks.Name and explain at least five drawbacks to franchising from the franchisee's perspective.

Franchising is an important part of the U.S.economy.Briefly explain its importance,define franchising,and identify the three basic types of franchises.

In many franchises,strict uniformity is the rule rather than the exception.

Most franchise experts consider the most important factor in the success of a franchise to be:

The FTC verifies the accuracy of the franchise disclosure information required by the Trade Regulation Rule.

Trade name franchising involves licensing the rights to sell specific products under the manufacturer's brand name.

The franchise contract defines the rights and the obligations of both parties and sets the guidelines which govern the franchise relationship.

Describe the key trends that will affect franchising over the next decade.

McDonald's relies almost exclusively on the trade name type of franchising.

When Wal-Mart began having McDonald's restaurants share their retail space they were exercising master franchising.

Independent entrepreneurs with a "go-my-own-way" attitude are ideally suited for becoming franchisees.

Franchising benefits the franchisor by providing a quick way to expand the distribution system and a way to grow without the cost and effort to develop managers internally.

Territorial encroachment is becoming a hotly contested issue as franchisers have nearly exhausted prime locations for franchises.

Pure franchising involves the right to use all the elements of a fully integrated business operation.

________ franchising exists when a franchisee is licensed to sell specific products under the franchiser's brand name through a selective distribution system.