In what way is a franchise's control over the business greatly reduced? How might you describe the professional approach to sales? The inventory should be examined for which of the following? E. Single-unit franchises are a very low-cost method of selling. Entitles the franchisee to business operational advice. B. Which of the following agencies will most likely arbitrate this dispute? it can be either franchisor- or franchisee-driven. b. What is the condition of the inventory? A franchisor pays a fee to obtain a franchise. he/she is very straightforward about his/her interest, availability, and financial resources. franchisor supplies brand names, techniques, or other services instead of a complete product. old-old 5-age. b. pay a fee. This means that it is a riskier purchase than the purchase of a franchise. to generate data which can be used to accumulate working knowledge. c. number of competitors. Increased management flexibility How often should financial accounting information be reviewed by management? competition may be spending more money on advertising than you. C. Training. Freddie's Fenders is seeking a loan from the SBA. green products unscrupulous practices. E. All of the above are about equal. d. John, an entrepreneur, approaches the firm with a proposal. Which one of the following is not one of the required factors for successful leadership? Portica knows the customers of her hat shop by name and knows each of their preferences. The Antitrust Division of the Federal Trade Commission takes legal action against any business it believes has tried to monopolize an industry. all of the above. b. B. b. One wants to make sure they are not buying into a fad but a viable long-term business. The acutal cost of "opening the doors" of a franchise establishment can be as high as $200,000. How many years will she have to repay the loan? a. a. E. Is a government tax to register the franchise. guidance from the franchisor Terry's Tires made just under $750,000 last year, according to the Small Which one of the following is not a major question at the onset? Adequate frontage is a necessity for most retail businesses. Low expectations among franchisees D. Usage tax. 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. a. Which of the following is true about co-branding? C) Purchasing power Which of the following would not be a good reason to start a small business? b. a. Entrepreneurs tend to work harder and take moderately greater risks than persons working as employees in someone else's firm. a. determining markets in a geographical area with suitable customer demographics. a. Which of the following types of financial ratios measures the ability of the franchise organization to turn sales into profits? Firms selling heavy industrial machinery are most likely to use the franchise model to control product distribution. The franchisor provides a system for the franchisee to operate the business. C. Multi-unit franchises require the franchisor to provide greater operational assistance to their franchisees than do they do for single-unit franchises. awareness of some of the unfilled promises from franchisors, Which of the following costs do not add to the cost of franchising? Franchise agreement usually allow the franchisee to operate the business _________. d. NOT: marketing and advertising to customers Why would a person choose to buy a franchise? His actions are possible because small businesses. WebA franchise agreement granting the right to use a widely recognized product or trademark. b. And, how much will it cost to implement? Which of the following processes involves interpreting a relationship between two financial figures? franchiser. the competition in the area. In many instances, products or ingredients in a franchise must be purchased from ________. He was referring to, the reality that small business workers are more innovative than workers in large businesses, The invention of insulin and power steering by small businesses are examples of the ability of small businesses to provide, Increases in productivity for the past 200 years are characterized by, new ways to do a job with less effort and at a lower cost. payroll What is a realistic number for a sample size when doing market research? Which of the following is true regarding inspections conducted by franchisors? About how much work should she expect to do to make the franchisee successful? With regard to the evaluation of franchisee performance and degree of control: The high degree of control by the franchisor helps to provide a guaranteed, detailed, and regular flow of performance data that benefits both parties. One of the advantages of buying a franchise is that the purchaser has access to a proven business system. \end{aligned} 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." A) Self-reflection 2- Do not have to find employees franchisee. The Federal Trade Commission regulates franchise. Externally dedicated to the market, yet internally focused on production, seeking to produce high-volume or high-value product/service while carefully examining any new opportunities for costs/benefits in relation to known strengths of the firm, is a description of which one of the market-focused business strategies identified below. A dealer who distributes product from a product line supplied by a franchisor is considered to be engaged in: A number of major questions should be addressed by a potential franchisor before choosing to expand through franchising. In business format franchises the franchisor provides the complete system for operating the business. For Jerry's Automobile Parts Fabricating business to qualify as a small business, it can employ no more than ___ people. all of these are reasons it could be beneficial. d. d. Franchisors must have a high-quality support An agreement not to compete is also known as A. whether employees with key skills will stay or leave. 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 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. About fifteen percent of all marriages in North America fail. 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. When will the activities be started and completed? d. management and training. procedures are essentially "set in stone.". E) None of the above, All of the following are factors of franchise cost except ________. maintain a specified quality of performance. collaboration with suppliers through Internet, NOT: franchisors Which of the following is Untrue about the policies and procedures of a franchise system? Strong franchisors have all of the following except ________. What is the primary disadvantage of owning a franchise experienced by a franchisee? Regarding the interfaces between channel management and other marketing mix variables that exist in franchise channels, which statement is most accurate? NOT: customers quality of the competition. A. d. design a logo for the unit. 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. WebAll of the following are a new type of franchising opportunity except ________. They meet with a business planner who helps them compile a business plan. D) Federal Disclosure Document Which of the following types of businesses benefit from being located near competitors? the owner's family stability and relationships. a. 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. Is it up to date? b. How long has a franchisor been in the business? Which of the following is a question which can be sidestepped when buying a business? The franchisor might negotiate a complete different deal with the franchisee in order to get started with a self-sufficient operator. Competitor factors in a buying decision do not include The business franchise model is always an appropriate model to ensure a high degree of control, regardless of the industry. b. f(t)=t+2t2f(t)=\frac{t+2}{t^2} Richard orders some Harley-Davidson Trikes for his inventory. Studies have shown that the incidence of innovation among small-business workers is ___ among workers in larger businesses. When Reno purchases the McDonald's she will be expected to supply, labor and capital and will own and operate the outlet. Reno is a. The initial franchisee vetting usually includes _________. Which of the following businesses would most likely be included in the production industry? D) Optimism the franchisor offering a standard,well-known product or service. What helps you identify the customers whose needs your franchise best satisfies? C. Generally, franchise marketing channels are more closely knit (i.e., closer relationships) than conventional channels. Are You Still a Franchisee When the Franchisor Controls Everything? Obtain needed training from franchisees brand-name appeal. 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 The potential buyer NOT: to improve operations at franchised units. B. a. Is a specialized broker who handles all arrangements for closing a buyout, The purchase price of a business is determined by the negotiation between. B. How many of the personnel will remain with the firm? Which of the following is an intangible asset? D) Be proven A. Which of the following is often referred to as the franchisee's "bible"? Why might it be a good idea for a franchisor to investigate several ASP vendors before choosing one? In purchasing an existing business the first question should be: "Why are you selling?". Which of the following should the potential entrepreneur consider in developing a plan of operation? Which descriptor is not a part of the definition or franchising? Business students at universities can work together to provide management counseling to small businesses in their community. How much of successful selling consists in simply listening to the prospective buyer? all of the above, Coming up with a unique good or service is a _____approach, while adapting something that is currently on the market or extending the offering to an area where it is not presently available is a(n) _____approach. Anastasia has started a dry cleaning business but is having difficulties with various aspects of organizing and operating the business. In the United States, ___ account(s) for 97.5 percent of all identified exporters and produce(s) 31 percent of export value. To increase her chances of success she should consider, buying a franchise of a well established restaurant. Which of the following is an advantage to the franchisee? E) Local publicity campaigns. All of the above. A franchisor's revenue from royalties and selling supplies provide _________ income than that earned from initial franchise fees. a. 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. D. Real estate. a. The franchise distribution system is composed of approximately _________ franchise business establishments that provide more than 11 million jobs. What are the typical payments paid by a franchisee to a franchisor? b. d. The accountant assigns revenues and expenses to specific years before preparing the financial statements. D) Doing Internet research Bus-x100 Exam #2 Flashcards | Quizlet True or false: A disadvantage of buying an existing business is that operating processes and policies have already been established. Which philosophy of expansion is, as a rule, the best method for franchisors? a deferential sale of business clause. There is an established set of process. The term "risk vs. loss" refers to the amount of return for funds invested. Uniqueness in a product or service can be demonstrated through a new-new approach or a new-old approach. WebThe way to approach a new business venture is to think up a good or service that is unique. Small Business Chp IV - Franchises and Buyouts Flashcards A. Degree of control and importance of channel members Salability Business format franchising is best illustrated by the system offered by, The franchising strategy whereby an individual or firm is granted the legal right to own more than one unit of a franchised business is known as. B) Brand recognition d. 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. D) Removes the creativity and freedom a. WebThe Franchisor provides all the following Except. D) Unity A CPA Changes in the product supply chain. The franchisor licenses its trademarked products to franchisees. B) Be a concern for a franchisee A. Franchisors provide significant operational assistance to franchisees. An existing business has an established cash flow. a. One of the special focus areas of the SBA is to, assist minorities wanting to start or expand small businesses, A business seeking a loan through the Small Business Administration will actually be given a loan through. B) Friends As a class assignment, business students were told to prepare a business plan for a business they would like to own. 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?