The Clayton Act makes it illegal for competitors to get together and set prices on the products or services they sell. Evaluating franchise opportunities include finding out more about which of the following? Which of the following is a true statement pertaining to single-unit franchises? a. My salary has remained the same for the past 7 years, but my standard of living has fallen. Which of the following are ways in which a franchisor earns profits? The inventory should be examined for which of the following? c. a. E. None of the above. b. Which one below is not one of these tried-and-true approaches for growth? B. inventory training and guidance. prepaid expenses Identifying one or more target markets and creating a marketing mix that has focus upon a customer grouping's needs is the definition of. your financial backer. Capital advantages C) Inclusive franchising you. Which franchisor manual provided by the franchisor to new franchisees is referred to as "the bible?". WebAll of the following are a new type of franchising opportunity except ________. Though a location manual or policy may be developed to assist in determining optimal sites, for franchised businesses that require a store-front location the final determination often rests with: Which two concepts receive primary consideration when determining store layout? C. Franchise agreement inventory turnover. T/F, A franchise is typically attractive because it offers training, financial assistance, and operating benefits. WebThe purchaser of a franchise is called the franchisor. This company could also be referred to a. Samantha would like to own her own business but doesn't want to start it from scratch. 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. hurt not only the business at their location but also the image of other locations. c. a. c. A partnership agreement identifies the type and value of the investment contributed by each partner. His customers often talk about trikes. & H_{\mathrm{a}}: \sigma_1^2>\sigma_2^2 Franchisors capitalizing or financing their businesses are generally required to disclose three key financial statements. franchatter. C. These franchises operate in environments with little competition. The way to approach a new business venture is to think up a good or service that is unique. B. Uniqueness in a product or service can be demonstrated through a new-new approach or Business related reasons for selling do not include which of the following? B) Failure Firm's records company name. The most common form of franchising today is one in whic. a financial investment. symbols and logos. d. d. B. 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. D) Removes the creativity and freedom Darrel's Donuts has been operating quite successfully for two years. 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. your lawyer. Changes in leasehold conditions. a. brand-name appeal of the franchise The number of jobs provided by franchised businesses is slightly less than those provided by durable goods manufacturing. C) Visiting the franchise headquarters the financial picture of the business. The advantages of franchising include: What factor generally determines which co-branding method is chosen by a franchisor? sales taxes, business taxes, property taxes, employee taxes. Which of the following organizations can assist him? c. There are several ways to protect a trademark, as indicated below. WebWhat is usually required for a franchisor to terminate a franchise? a. It is uncommon for a franchisor to handle the national and regional media purchasing for a franchisee. Jeremy has written a business plan for the business he would like to open. Which of the following is not a key question a prospective buyer needs to ask in buying a business? c. B. Which of the following is not a disadvantage of a major franchise? Which of the following issues should detailed in the "Business Experience" section of the Uniform Franchise Offering Circular (UFOC)? The franchise distribution system is composed of approximately _________ franchise business establishments that provide more than 11 million jobs. D. System to network with competing franchises. One of the more interesting ratios for franchising is the Location Selection Ratio or Sales/Costs ratio. NOT: sufficient time to integrate the brands MAYBE: natural synergy between the brands. b. Many fees are must be paid regardless of ________. A. c. All of these are ways a franchisor makes money; The costs of franchises vary significantly. a. number of competitors. c. E) Regret, Performing due diligence may include ________. If a franchise system is struggling, not achieving long-term success. Equipment Why might it be a good idea for a franchisor to investigate several ASP vendors before choosing one? 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? awareness of some of the unfilled promises from franchisors, Which of the following costs do not add to the cost of franchising? the cost of replacing an employee. b. minority b. c. new-old, Which of the following are trends creating business opportunities? How many years will she have to repay the loan? b. C) Territory A franchisee generally receives which of the following when purchasing a business? Which of the following does Smoothie King founder Stephen Kuhnau credit as the reason for his success? the owner's reason for selling. Uniform Franchise Offering Circular (UFOC) b. A) Training 3 reasons for buying an existing business. The Franchise Disclosure Document helps the franchise buyer to make a knowledgeable purchase. c. the franchisor offering a standard,well-known product or service. maintain a specified quality of performance. a. new-old What pricing strategy should the firm use? 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. The franchisor owns the trademark and business model. E. Quality control standards. c. it may be purchased at a bargain price. a. c. How long has a franchisor been in the business? market value. c. In business format franchises the franchisor provides the complete system for operating the business. C) Operations Buildings lower d. T/F, Because the offering and sale of a franchise are more intensely regulated by state and federal laws than is the establishment of a new business, individuals and/ or firms involved in negotiating a franchise arrangement have limited need for legal counsel. This is higher than _____, the amount the Census Bureau and Federal Reserve say 50 percent of all new businesses begin with.. A(n) ____ is a carefully constructed plan for an individual starting a business. firms that have complex internal systems to execute, that draw from a limited pool of qualified employees, or require significant amounts for training to assure franchisee competence in delivery of the system's products or services. A ________ specializes in selling buinesses. Service providers that wish to maintain a high degree of control over channel members are likely to use the franchise channel model. Reviewing personnel of the business about to be purchased is important in order to determine E) All of the above, Which of the following aspects would the franchisor control in a business-format franchising situation? Richard orders some Harley-Davidson Trikes for his inventory. Business Brokers help entrepreneurs locate the funds necessary to start a business. The prospective investor should get as much information as possible on the franchisor. Godfrey has just graduated from business school and is seeking employment. 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. Traits that entrepreneurs tend to have include all but which one of the following? B. After all of your investigation into a franchise, the final decision should be up to When buying a business, competition must be investigated because The control issues are: 1. help out with financial assistance. 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. The individual who buys the franchise is the What is the purpose of ratio analyses of financial statements? Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese. WebThe Franchisor bills and received payment from the customer directly, and then after deducting its royalties and other fees and payments, sends the Franchisee the balance; If Which of the following is a disadvantage for the franchisor? a. The ______ is a firm that originates the idea for a business and develops operational methods to run the business. 41 A wholesaler purchases products in quantity from _____ and then resells them to retailers. Which one of the following is not a major question at the onset? Automobile dealerships and ___ were the primary uses for franchises in the early days of franchise agreements. Franchising offers all the following benefits for franchisers except. 2- Do not have to find employees a. b. He has misjudged, In order to operate a successful small business, the entrepreneur should be most concerned with, Jeff Katz, the founder of Orbitz,Inc., when speaking about new businesses recently said, "A flat checkbook is the mother of invention." new-new, old-old the exact status of the franchisor's intellectual property, such as logos, symbols, and words. equity? a. 7-eleven Inc. Payroll tax. When purchasing an existing business, the prospective owner should conduct an assessment of the current group of employees. b. The "right questions" the prospective small business owner should ask about a franchise deal with Franchisees may pay a fee that is separate from the royalty fee, often called a ________, to contribute to a shared advertising fund. On-site management In exchange for an ownership share, small businesses receive financing from a group of investors known as track record of the franchisor b. If he seeks the average-size SBA-guaranteed business loan he will borrow, Money invested in small, new, or struggling firms that have the potential to become very successful is called. The term "risk vs. loss" refers to the amount of return for funds invested. This program is part of the. Chance, What is an often overlooked asset when acquiring a new business? 3- Customers already know you exist. D) Unable b. A Starbucks franchise located inside a Target store is called ___________ franchising. Find all vertical and horizontal asymptotes of the graph of the given function. This means that it is a riskier purchase than the purchase of a franchise. b. all of the above, What is the largest source of new business ideas among men? An existing business has the benefit of having an established set of processes. The product quality is within the perception of the customer and is greatly influenced by the franchise system's server. He is considering applying to small firms because he knows that small businesses have traditionally added _____ new jobs to the economy. c. Strong franchisors have all of the following except ________. c. Which of the following statements best describes franchise channel structure? The most significant advantage for a franchisee is the increased probability of success. c. T/F, Valuing a company is an easy task that results in a precise figure T/F, Financial statements can mislead a potential purchaser trying to develop an accurate business valuation T/F, A nondisclosure agreement signed by a prospective buyer shows the seller that the buyer intends to purchase the business T/F. C. Training. Bill has his own tax preparation and accounting business. Franchisors often determine a franchisee's likelihood of success by looking at two things. Identify the unique aspects to purchasing an existing business. b. quality of the competition. a. c. D) Promotional support E) None of the above is an exception. This is the most common form of franchise channel structure. new-old. brand-name appeal. c. You stop by a Carl's Jr. fast food restaurant and notice that they also have Green Burrito Mexican food. A ____ is a system of distribution that enables a supplier to arrange for a dealer to handle a specific product or service under certain mutually agreed upon condtions. D) Federal Disclosure Document The Small Business Administration offers many courses to individuals interested in going into business or improving his or her business. d. E. Royalty fee. Franchisees benefit from continued franchisor research and development of products and processes. Which of the following is often referred to as the franchisee's "bible"? The Federal Trade Commission regulates franchise. Only franchisees operating multi-unit franchisees can own more than a single franchise.. d. Jack owns a franchise. Franchisees have the option of using the logo and symbols of the franchisor. A) Accounting a. Which of the following is true about co-branding? D. Real estate. The franchisee is bound by the terms the franchise contract. Which two factors are especially relevant in the scope and frequency of franchisee evaluations by franchisors? What type of competition exists? Salability The business arrangement, otherwise called a franchise opportunity, has three major components that constitute the essence of what is generally referred to as a franchise. weaknesses. a. T/F, One drawback of becoming a franchisor relates to possible new restrictions as a requirement for contract renewal. Entitles the franchisee to business operational advice. This category of information offers the distinct advantages low cost and quick availability. Sound franchisors provide a significant quantity and excellent quality of start-up assistance to new franchisees, as well as ongoing education and support for established ones. For Jerry's Automobile Parts Fabricating business to qualify as a small business, it can employ no more than ___ people. Which of the following businesses would most likely be included in the production industry? Which of the following is true about the serious prospective franchisee? d. Low expectations among franchisees Prior job b. new-old, When one discusses upside gain and downside loss, one is talking about B. 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. NOT: dealing with financial issues such as accounting and finances. C) Popularity legal and professional fees Franchise agreement usually allow the franchisee to operate the business _________. What is the primary disadvantage of owning a franchise experienced by a franchisee? Product and trade-name franchising is the licensing of the product or the production of the product and the use of the trademark, logo, or other identity of the franchise. Terry's Tires made just under $750,000 last year, according to the Small Business Administration. C. Lodging. The information contained in the daily business intelligence reports becomes the foundation upon which a franchise system builds what? H0:1222Ha:12>22. d. Franchise fees: What helps you identify the customers whose needs your franchise best satisfies? Which of the following is not an ongoing cost of franchises? What is the condition of the inventory? Studies have shown that the incidence of innovation among small-business workers is ___ among workers in larger businesses. E. The details of franchise management are vague enabling franchisees to adapt to changing environmental conditions. Which one of the following is not part of a franchise business arrangement? Changes in the product supply chain. By immersing them in a week-long training session in an actual store, All the following explain why franchising is so widespread EXCEPT. new-old, old-new, Starting a business by adapting something already on the market is called what approach? The local Small Business Administration Office franchisor. E) All of the above, The formula provided by the franchise does which of the following? a. b. The franchisor's responsibilities include providing The term "upside gain and downside loss" refers to the profits the business can make and the losses it can suffer. opening product inventory. What is the effect of such a tax on a. Will the business's mission and vision change? Operational Control. Samantha would like to get a small business loan from the SBA. new-old, old-old Pay for all physical assets (e.g., equipment and building), needed to operate the franchise. Independence and a desire to determine one's own destiny are some of the entrepreneurs' personal factors in small-business success, others include: Jennifer would like to open her own business. E. Is a government tax to register the franchise. This is an example o. Craig has $60,000 to invest in a new small business. 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. Brent and Wendy plan to open a new business. Why would a franchise system monitor its external environment? the ability to build personal relationships with the owners and other employees. "The Franchisor, Its Predecessors, and Affiliates" section of the UFOC _________. Which of the following is something that would not be included in the plan? A. training and guidance provided by the franchisor. liquidation pricing, "Piggybacking" one's way into business involves using a ____approach. There are six major organizational development tasks required of a franchisor to develop from a single unit firm into a growing franchise system. E. The desired degree of control of franchisees by franchisors is not relevant to the decision by franchisors to use the franchise channel model. Web4-family background. And, how much will it cost to implement? The ability to leave the venture if an entrepreneur does not enjoy the business is severely limited. Which of the following is a question which can be sidestepped when buying a business? A. One of the advantages of buying a franchise is that the purchaser has access to a proven business system. reduced concern over future operations. C) Years of experience Add appropriate labels. b. provide continuing aid and a guidance to the person buying the franchise. To better understand the demand for a product or service. a. What is a realistic number for a sample size when doing market research? d. A franchise system can be used for handling c. Firms selling heavy industrial machinery are most likely to use the franchise model to control product distribution. 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. c. False T or F? d. a. Which of the following are benefits of purchasing a franchise? Franchisee operational efficiency is more important than working relationships between franchisors and franchisees Which of the following is an intangible asset? Business related reasons for selling may include all but which of the following? A) Self-reflection economic efficiency? b. guidance from the franchisor Terry's Tires made just under $750,000 last year, according to the Small This is a ___ business. d. B) Business-format franchising The business that represents 99.7 percent of all employers in the United States is a. Which of the following is not an advantage of a franchise? engaging in a continuous business relationship. Regulations that protect consumers include trademarks, zoning, regulations, and consumer protection laws. What is your conclusion using the p-value approach? In the United States, ___ account(s) for 97.5 percent of all identified exporters and produce(s) 31 percent of export value. new-new What is the effect on economic Before we discuss who gets control of the franchise operations, lets clear up some terms about the people involved in the franchise model. The franchisor owns the trademark and business model. Upon paying the upfront fee and continuing royalties, the franchisor grants the franchisee the rights to use the trademark and business model. A. the market. a. d. It is always important that you weigh the advantages vs. disadvantages in purchasing a franchise. Hobby c. Milkshake Lending Company is a small privately owned firm providing venture capital to small businesses. b. E. Possible high level of managerial motivation fostered by franchising. Supplier Control. b. Juan is most likely a franchisee in the ___ industry. C. Companies like Proctor & Gamble frequently use the franchise channel model for distribution of consumer goods. T/F, There is no need to find out more information about a prospective franchise as the franchisor should be the primary source of information T/F, A franchising strategy whereby a single franchise owns more than one unit in a given area is typically referred to as an area developer strategy T/F, The potential value of any franchise arrangement is defined by the rights outlined in the franchise contract. NOT: inventory management and recovery. green products The International Franchise Association is ________. D. Franchisors spend billions of dollars annually to keep franchisees trained. Which of the following statements most accurately describes the success rate of franchises? Which one of the following is Not a common method of borrowing funds in the short-term when considering the rate of interest to be paid: To fund a franchise business, most franchisee use: In financial planning with the franchised business, the most basic and essential variable of the financial planning tools is the: All of the current assets of the firm, or more specifically, current assets minus current liabilities equals: Estimation of sales and other income for a period and cash disbursements to be paid in the same period identifies the components of the: What is the primary purpose of information systems in a large franchise? E. Franchisees provide significant operational assistance to franchisors. He wants the business to succeed. When will the activities be started and completed? planning, persistence, patience, people, profit (pg 136) what are the 3 insurance Capital requirements that a potential franchisee must consider prior to becoming part of a franchise system include each of the following except for: Reasons a franchise system would have corporate locations, as well as franchisee locations are shown below, except for: franchisor avoids potential conflict with franchisees that may rise based upon market and site locations. A leading apparel manufacturing firm in the United States invites applications to establish franchises in Texas. 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. d. machinery. new-new A) Product and trade-name franchising Pizza Hut B) Friends d. His actions are possible because small businesses. Frieda's Freestyle Skateboards has many customers but is not dominant in its field. The action plan covers 3 primary areas: the owner, the finances, and other vital factors. The product life cycle model is a theoretical construct that helps franchisors understand the industry cycle and the cycle of specific products or services with a franchise system's product line. D) All of the above are types of franchising. all of the above. The extra value a business can command in a sale is known as b. A) Type of franchise None of the above, An analysis of the competition should look for ______. Developing a plan for the business. Upon paying the upfront fee and continuing royalties, the franchisor grants the franchisee the rights to use