A) Success loss of freedom and control as franchise system grows. B) Friends Trade associations for the industry. Property, plant, and equipment is recorded at cost (minus any accumulated depreciation) A. c. NOT: dealing with financial issues such as accounting and finances. franchiser. T/F, A franchise is typically attractive because it offers training, financial assistance, and operating benefits. a. Samantha would like to get a small business loan from the SBA. All of the above. c. B) Designated suppliers A. Chance d. c. Freddie's Fenders is seeking a loan from the SBA. a. A) Established multiple franchises Is a specialized broker who handles all arrangements for closing a buyout, The purchase price of a business is determined by the negotiation between. c. The franchisor is the second party to the franchise agreement and is the owner of the unit or territory rights. Part of the motivation for a franchisor to develop a franchise system is to ensure consistency throughout the business units in the system. b. A partnership agreement identifies the type and value of the investment contributed by each partner. E. Royalty fee. new-new D) Unity The franchisee and franchisor are linked by a bond of voluntary cooperation rather binding contracts. b. a. company name. The most significant advantage of a franchise is the increased probability of ________, given that franchise brands have positive track records and instant recognition in most communities. Jimmy John's, Which is not a cost of franchising? The business franchise model is always an appropriate model to ensure a high degree of control, regardless of the industry. Which of the following should the potential entrepreneur consider in developing a plan of operation? After all of your investigation into a franchise, the final decision should be up to E. Number of manufacturers in the industry. The initial franchisee vetting usually includes _________. c. Reno decides to purchase and operate a McDonald's restaurant. Which of the following is not an ongoing cost of franchises? The owner may be in trouble with suppliers. Pick the correct phrase from the following that best characterizes the relationship between franchisors and franchisees. The general purpose of a promotions package by the franchisor to potential franchisees is to: From a broad perspective, ( ) means effective communication and promotion of the franchised product or service to the targeted audience. Uniqueness in a product or service can be demonstrated through a new-new approach or Actions by franchisors to void the contracts of franchisees in order to sell the franchise to someone else and collect an additional fee. Bringing two or more franchise brands together within a single enterprise. The exercise of reasonable care in the evaluation of a business opportunity. Buildings Franchising is based on a system that the franchisor has already set upand it works. Thus, franchisees must comply with both the franchise agreement and the franchise operations manual to achieve a comparable level of performance. Moreover, these materials safeguard the whole franchise. c. Do you think this was a popular tax? a financial investment. Franchisors benefit from the franchise agreement because they have. inventory b. time and effort are reduced The "Trademarks" section of the UFOC details ___________. Which one of the following is not one of the required factors for successful leadership? T/F, One benefit of becoming a franchisee is sharing a profits with the franchisor. E. All of the above. According to the SBA, in 2012 women were 51 percent of the U.S. population, and owned at least ___ percent of all small businesses. In the "_________" section of the UFOC, the franchisor must disclose all fees that are charged to franchisees. This program is part of the. An entity or invidiual granted the right to conduct business according to specified methods and terms of another party is known as a, A legal agreement between two parties in a franchise arrangement is referred to as a, benefits of becoming a franchisee include all of the following terms except, Franchise costs include all of the following expenses except. 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. Identify the unique aspects to purchasing an existing business. E. All of the above are about equal. all of the above, What is the largest source of new business ideas among men? b. It is most likely that, it may take several years for this business to begin to show a profit, Barrack opens a bagel shop and at the end of each day has five dozen bagels left over that he cannot sell the next day due to health code restrictions. Darrel is considering expanding the business by franchising. asset value. WebThe purchaser of a franchise is called the franchisor. a. Reno is a. guidance from the franchisor Terry's Tires made just under $750,000 last year, according to the Small d. The accountant assigns revenues and expenses to specific years before preparing the financial statements. minority What is the primary purpose of information systems in a start-up franchise? C. Franchise fee. What are they? Is it up to date? b. franchising He feels that the franchisor is hurting his business by forcing him to buy higher priced products from high-priced suppliers. training and guidance. Increased management flexibility number of competitors. Chance, What is an often overlooked asset when acquiring a new business? a. all of the above. What is the owner's personal net worth? The _________ has the responsibility for the business location, of establishing the business, and of building the storefront. Franchisors capitalizing or financing their businesses are generally required to disclose three key financial statements. c. Automotive new-new, old-old C. Generally, franchise marketing channels are more closely knit (i.e., closer relationships) than conventional channels. Entitle the franchisee to use the franchise's name. it may be purchased at a bargain price. B. Business situations that are appropriate to consider when looking for growth through franchising include all but which one of the following? c. C) In shopping malls A) They may be announced or unannounced. The elimination of time and effort associated with starting a company is an advantage of acquiring an ongoing venture. d. Sales tax. They have heard that the disadvantages of small businesses include all of the following except. opportunitites. An agreement not to compete is also known as A well-established business model A. d. & H_{\mathrm{a}}: \sigma_1^2>\sigma_2^2 franchisor True or false: An entrepreneur should explore what aspects of a franchisor-franchisee contract are negotiable by making a list of wants and desires. b. E) Not be counted on, A) Provide a significant advantage for your business start-up, All of the following are advantages of franchising except ________. D. Limited independence of the franchisee. Which of the following types of financial ratios measures the ability of the franchise organization to turn sales into profits? D) Gender Which of the following things is NOT true about the accounting process? Operational Control. a legal restraint of trade. B. Ability to achieve a good golf score while making sales to prospective franchisees. The "Restrictions on What the Franchisee May Sell" section of the UFOC describes ____________. What amount is generally considered adequate? 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. Consideration occurs when one party in a contract offers or agrees to do something and the other party accepts. A. d. Which of the following organizations can assist him? Meeting with every member of the current staff. Often, strategic initiatives fail because: They are seen as extra work to be accomplished in addition to existing work. Good cause B. Which of the following is an advantage to the franchisee? One of the advantages of buying a franchise is that the purchaser has access to a proven business system. This category of information offers the distinct advantages low cost and quick availability. The majority of small businesses are managed by, Hamilton has wanted to start a business of his own since he was a small child. Which one of the options below is not one of these critical customer perception factors? 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. A) Training franchisette. D. Franchisors spend billions of dollars annually to keep franchisees trained. brand-name appeal of the franchise D. Number of channel members and degree of control. Many fees are must be paid regardless of ________. E) Very few franchisors do inspections. Add appropriate labels. B) Calling on existing franchisees E) All of the above. One wants to make sure they are not buying into a fad but a viable long-term business. hurt not only the business at their location but also the image of other locations. A. Policies and procedures for running the business. if employees are leaving, will enough remain to operate the business. 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. 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. journal, general ledger, financial statements. a. A. Franchisors provide significant operational assistance to franchisees. Sales records are of very little value to a buyer in evaluating a company's worth. new-old Some franchisors provide different levels of support depending on how much the franchisee is willing to pay. b. d. B) Not required There are several ways to protect a trademark, as indicated below. B. The way to approach a new business venture is to think up a good or service that is unique. Considering the processes of management for a the franchise system, overall planning of the firm for today's operations and the future of the system itself is the primary responsibility of, NOT: franchisees fast and selective distribution of products. Business Brokers help entrepreneurs locate the funds necessary to start a business. d. a. D. Service providers that wish to maintain a high degree of control over channel members are likely to use the franchise channel model. E) Regret, Performing due diligence may include ________. c. The accounting records of a company are kept separate from its owners. a. franchisee Which type of franchisor manual is specifically focused to this purpose? b. An advantage associated with franchising is Jeremy has written a business plan for the business he would like to open. discloses any predecessor to the current business. The Franchise Disclosure Document helps the franchise buyer to make a knowledgeable purchase. WebThe Franchisor provides all the following Except. all of the above. The attitude of the customer is made up of three key factors. C. Potential to reduce distribution costs alternative energy The franchisor says it has the power to control which suppliers the franchisees use due to implied powers in the franchise agreement. Which of the following small businesses could be categorized as being in the distribution industry? Competitor factors in a buying decision do not include The most important area to examine prior to purchasing a business is company profitability. 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. the franchisor. the franchisee After doing routine background checks, the firm permits John to open a branch of the firm in a given area, use the firm's name, and operate a business within the guidelines of an agreement. What type of competition exists? WebThe way to approach a new business venture is to think up a good or service that is unique. a. to generate data which can be used to accumulate working knowledge. What is the primary purpose of information systems in a mid-size franchise? 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 a deferential sale of business clause. WebThe Federal Trade Commission monitors all of the following activities except the sale of unhealthful foods The Franchise Disclosure Document helps the franchise buyer to make d. For Jerry's Automobile Parts Fabricating business to qualify as a small business, it can employ no more than ___ people. The ___________ is a contract linking all franchisees to the franchisor. B) They are always surprise inspections. weaknesses. 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. NOT: Multi-unit Franchisee. Why do most franchisees choose to go into business with a franchised company? C. Training. Which of the following statements regarding the franchise fee are correct? NOT: to generate data which can be used to accumulate working knowledge must be provided to the potential franchisee early in the process. Obtain needed training from franchisees franchisor supplies brand names, techniques, or other services instead of a complete product. All of the following are true about small business except. 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. a. b. a. Which of the following types of financial ratios measures how well a franchise meets its short-term debts or financial obligations? Selling a franchise to the franchisee What is the name of the business agreement Henry would sign? The motivation of franchise channel members has less to do with cooperation and partnerships than in conventional channels. 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. B. Which of the following statements best describes franchise channel structure? This includes all of the following except: To increase her chances of success she should consider, buying a franchise of a well established restaurant. d. a. C) Uniformity Macy because the SBA's primary financial function is to guarantee loans. All of the above statements are accurate. whichever method the franchisor deems appropriate for a their particular business. Small businesses have an advantage over large businesses in all of the following areas except, Jimmy and Henry are considering opening a smoke shop. The franchisor owns the trademark and business model. The local Small Business Administration Office The _________ is the entrepreneur who buys the franchise from the ________. A) Product and trade-name franchising Which of the following types of businesses benefit from being located near competitors? In the United States, ___ account(s) for 97.5 percent of all identified exporters and produce(s) 31 percent of export value. SCORE is a group of retired businesspeople who volunteer their services to small business through the SBA. How many personnel are going to remain? 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. a, b, and c only. Which practice is a competitive concern for franchisees? NOT: asset utilization for the business invest money in the operation. B. A) Guarantees brand recognition new competition may reduce market share. Which of the following is NOT one of the four P's of selling? As it pertains to the motivation of franchisees, which statement is generally false? new-new Franchisees that create a poor brand image through bad customer service _________. "The Franchisor, Its Predecessors, and Affiliates" section of the UFOC _________. can learn about the franchise from the ground up. They meet with a business planner who helps them compile a business plan. (Check all that apply.) reduced concern over future operations. all of these are reasons it could be beneficial. b. c. The Uniform Franchise Offering Circular _______. E) None of the above is an exception. One downside for franchisors participating in franchise channels is: What is the largest guaranteed loan she could be granted? Is usually a one-time flat fee paid by franchisees to franchisors. Who is correct? Marketing strategy. identify a franchisor that is the best potential match for him or her in terms of support, expansion plans, and so on. c. What are the four main areas of taxation one must consider when reporting about a franchise's activity? Debt Service inventory a. Which technique is not valid for valuing a company? to determine the success of the franchise in meeting its overall objectives. b. b. E. All of the above statements are true. Franchising and franchise channels continue to grow dramatically Which of the following is not one of those statements? d. Which descriptive statement is NOT one of the legal ways of protecting a trademark? Which of the following ratios would be ranked the best? Uniform Franchise Offering Circular (UFOC) Franchises are governed by ________ laws and regulations. plant The "_______" section of the UFOC contains how disagreements will be resolved. Which of the following is NOT a component of a properly developed franchisor plan? The market research should be independent of the franchisor. Payroll tax. saleable value. Ellis owns a Subway franchise. c. all of the above. a. Education courses, What is the largest source of new business ideas among women? According to the text, which of the following is not a consideration when selecting a franchise? 2. C. Nature of product and number of channel members The most important section of the business plan is: In urban areas, approximately how much of a store's business is done by people who live or work within a five-minute drive or walk of the location? D. Franchising is an American business model that does not work well outside the U.S. Compensate the franchisee for the use of its trademark. E. Possible high level of managerial motivation fostered by franchising. An advantage to buying an on-going business is C. Franchise agreement success will cause another outlet to be opened nearby. a. All are costs. The person who gets the franchise is usually required to do all of the following except: T/F, One drawback of becoming a franchisor relates to possible new restrictions as a requirement for contract renewal. D. Uniform Code of Justice (UCJ) Name the three steps used to allocate producing department activity cost pools using the ABC approach. A. The potential buyer you. It is a channel used exclusively for distribution of consumer durable goods. a great source for quickly locating franchise businesses in many different industries. C. These franchises operate in environments with little competition. b. Why might co-branding be beneficial for a mature market? All of these are ways a franchisor makes money; b. TRY: data analyses. To properly develop a franchise system the franchisor must develop the franchise system at three different levels. Hobby The product quality is within the perception of the customer and is greatly influenced by the franchise system's server. age of the competition's owners. Identify an accurate statement about buying an existing business. The most common form of business ownership in the United States is the corporatio. the cost of replacing an employee. C) Never provide help for start-up The term "upside gain and downside loss" refers to the profits the business can make and the losses it can suffer. The __________ is the principal governing mechanism for both the franchisor and franchisee. A major reason for success of franchising is The term "risk vs. loss" refers to the amount of return for funds invested. prepaid utility bills c. Sylvia has an SBA-guaranteed business loan for the average life of such loans. B. a. a. C) Franchisor Disclosure Document c. Because of disputes between franchisors and franchisees, a program was instituted to arbitrate them. Not coincidentally, these issues have become more prevalent and evident with the advent of NOT: anticipated costs of operation. b. Which one of the following is not one of the levels for development? Which of the following is not a type of franchising according to the text? b. Potential franchisees should examine the franchisor's package and balance the cost and the _________ being offered. Richard orders some Harley-Davidson Trikes for his inventory. This desire is referred to as. Compared to other types of businesses, the failure rate for franchises is __________. 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. b. Franchise fees: d. This resulted in the passage of the Uniform Franchise Offering Circular (UFOC). a. Leticia has always wanted to own her own restaurant but has read that restaurants have a very high failure rate. Firm's records C) Franchisees Pizza Hut T/F, A disadvantage of purchasing a franchise is that franchisors seldom provide adequate training programs. 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. The party granting the license is the. b. The owner may be in trouble with suppliers. The reason franchises have been a popular form of business is due to ___________. \end{aligned} 40%, Which franchise is not included in the top ten franchises? Salability A franchisor pays a fee to obtain a franchise. Prior job all of the above. B) Franchisee Disclosure Document c. Which of the following is not a key question a prospective buyer needs to ask in buying a business? 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. goods. None of the above, An analysis of the competition should look for ______. payroll c. explanation: Franchisees often report the following advantages: management training and support; brand-name appeal; standardized quality of goods and services; national advertising programs; financial assistance; proven products and business formats; centralized buying power; site selection and territorial protection; a greater chance for success. machinery. Where should you retire someday? Only franchisees operating multi-unit franchisees can own more than a single franchise.. d. Which one of the following is not part of a franchise business arrangement?
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a franchisor can control all of the following except