a. The term "risk vs. loss" refers to the amount of return for funds invested. Depreciation. Franchisors must have a high-quality support An advantage associated with franchising is & H_{\mathrm{a}}: \sigma_1^2>\sigma_2^2 If you don't know how you want to be positioned in the marketplace, and don't know the value propositions you uphold, then you will be: positioned in the market-place and educated on that position by your competition. health care The founding a franchise is quite ________ in form and method to creating a new business from scratch. A) Established multiple franchises About how much time does it typically take in the United States to establish a business as a legal entity? What is the key to convincing someone to purchase your franchise, product, or service? The Uniform Franchise Offering Circular _______. An existing business has an established cash flow. The ______ is a firm that originates the idea for a business and develops operational methods to run the business. The action plan covers 3 primary areas: the owner, the finances, and other vital factors. NOT: asset utilization for the business A major reason for success of franchising is A franchisor's revenue from royalties and selling supplies provide _________ income than that earned from initial franchise fees. Buildings Which of the following is true regarding inspections conducted by franchisors? As it pertains to the scope and importance of franchising, which of the following statements is most accurate? A. All of the above. a. limits placed on the franchisee regarding what it can do with the product and its production. D) Be proven D) The community 9 System to network with competing franchises. Entrepreneurs should asses their skills and interests. D. Limited independence of the franchisee. What are the four main areas of taxation one must consider when reporting about a franchise's activity? The most important area to examine prior to purchasing a business is company profitability. d. Which one of the options below is not one of these critical customer perception factors? & H_0: \sigma_1^2 \leq \sigma_2^2 \\ Changes in leasehold conditions. 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. d. Which of the following are benefits of purchasing a franchise? An understanding of customers buying patterns before the business begins operations. c. c. a. Franchising offers all the following benefits for franchisers except. A lawyer She heard about a business model in which an individual or organization grants a license to another to operate an individually owned business as though it were part of a chain of outlets or stores. The local Small Business Administration Office The costs of franchises vary significantly. old-new Which of the following types of financial ratios measures the ability of the franchise organization to turn sales into profits? It is uncommon for a franchisor to handle the national and regional media purchasing for a franchisee. a. 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 potential value of any Franchises are governed by ________ laws and regulations. A) Training D) All of the above are types of franchising. income or wealth. 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. What are the typical payments paid by a franchisee to a franchisor? Supplies Importance of channel members and nature of product The government exercises very little control over sole proprietorships, A business that has the legal rights of a person and may have many owners is a, A business broker is a person who sells homes for a living, Which of the following antitrust legislation laws makes it illegal to discriminate by charging different prices to customers, The FDD contains all of the following information expect, the name and address of at least 200 current franchisees, Unlike regular corporations, an S corporation is not taxed as a business, Advertising fees for franchises are paid directly to the advertisers, An advantage of buying an existing business is that, A disadvantage of buying an existing business is that it may be poorly located. The extra value a business can command in a sale is known as Leticia would like to start a business and has investigated starting her own or buying a franchise. If you are looking to start a business that is creative and is not controlled by others, then franchising is your best option. 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. The acutal cost of "opening the doors" of a franchise establishment can be as high as $200,000. The elimination of time and effort associated with starting a company is an advantage of acquiring an ongoing venture. Selling a franchise to the franchisee reduced concern over future operations. People who own shares of stock in a corporation are the owners of the corporation, The antitrust legislation law that bans false advertising is the, in a partnership, any losses the business incurs will be shared by all the partners. 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. There are approximately ___ businesses in the United States. Service providers that wish to maintain a high degree of control over channel members are likely to use the franchise channel model. A leading apparel manufacturing firm in the United States invites applications to establish franchises in Texas. the ability to build personal relationships with the owners and other employees. Which of the following processes involves interpreting a relationship between two financial figures? 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. c. amount to the government independent of his or her B) Positive relationships with their franchisees NOT: dealing with financial issues such as accounting and finances. c. new-new How much of successful selling consists in simply listening to the prospective buyer? c. 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 D) Legal action c. new-new, new-old D. Reduce uncertainty A) Provide a significant advantage for your business start-up brand-name appeal of the franchise An individual looking to buy a franchise should _________. C) Specific times must be scheduled. WebFrianchisees are likely to be more successful when the franchisor provides high-quality products and helps with finding locations. d. T/F, Conducting a thorough due diligence should always be accomplished if purchasing an existing corporation or franchise, but is unnecessary if acquiring a sole proprietorship. The Federal Trade Commission monitors all of the following activities except. The franchisee is bound by the terms the franchise contract. Which of the following would not be a good reason to start a small business? B. Good cause B. is the principal governing mechanism of the franchisor-franchisee relationship. Equipment Upon paying the upfront fee and continuing royalties, the franchisor grants the franchisee the rights to use Pizza Hut Payroll tax. Reno is a. Which of the following activities at the franchised unit should be the center of attention? Because of disputes between franchisors and franchisees, a program was instituted to arbitrate them. b. C. Companies like Proctor & Gamble frequently use the franchise channel model for distribution of consumer goods. In purchasing an existing business the first question should be: "Why are you selling?". All of the above, Have a seller retain a _____interest in the business. She is concerned she may not be given a loan and researches the subject, discovering that in 2013, the SBA data showed that women-owned businesses are. A) Success franchising B) Financing assistance pay a fee. c. The accounting records of a company are kept separate from its owners. When will the activities be started and completed? Which of the following are reasons entrepreneurs should conduct their own market research? d. Chance All can be sidestepped. As a class assignment, business students were told to prepare a business plan for a business they would like to own. brand-name appeal. b. the franchisor Increased management flexibility loss of freedom and control as franchise system grows. d. Do you think this was a popular tax? c. In the "_________" section of the UFOC, the franchisor must disclose all fees that are charged to franchisees. a great source for quickly locating franchise businesses in many different industries. b. d. Developing a plan for the business. 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. Why might co-branding be beneficial for a mature market? C. Franchise fee. B. track record of the other franchisees as proof of success C. Lodging. C. Potential to reduce distribution costs Web4-family background. The _________ has the responsibility for the business location, of establishing the business, and of building the storefront. training and guidance. E) Regret, Performing due diligence may include ________. one time franchise fee and monthly royalties based on sales. goodwill. Pay for all physical assets (e.g., equipment and building), needed to operate the franchise. True. c. The initial franchisee vetting usually includes _________. prepaid utility bills d. What is the purpose of ratio analyses of financial statements? A CPA Financial control procedures A realistic estimate for the cost of legal requirements to begin a franchising system could be: How many phases are included in the Franchise PERT Chart? When buying a small business you need to know all of the following items except: Short-term obligations created by the franchisee in buying supplies, materials or services associated with running the business are referred to as: Often considered the most critical financial component of working capital is, NOT: accounts receivable The ___________ is a contract linking all franchisees to the franchisor. None of the above, Who must negotiate the final deal? The Small Business Administration offers many courses to individuals interested in going into business or improving his or her business. old-new Which of the following is true of the risk involved in buying an existing business facing bankruptcy? The business that represents 99.7 percent of all employers in the United States is a. 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. C) Uniformity Policies and procedures for running the business. A. Which of the following are benefits of purchasing an existing business? True or false: A disadvantage of buying an existing business is that operating processes and policies have already been established. The most common form of business ownership in the United States is the corporatio. Uniqueness in a product or service can be demonstrated through a new-new approach or a new-old approach. Identify an accurate statement about buying an existing business. Compared to other types of businesses, the failure rate for franchises is __________. There are few resources for franchise research. d. c. Juan is most likely a franchisee in the ___ industry. Will the business's mission and vision change? Which is not a key question to ask when buying a business? The business franchise model is always an appropriate model to ensure a high degree of control, regardless of the industry. Advertising According to the SBA, in 2012 women were 51 percent of the U.S. population, and owned at least ___ percent of all small businesses. machinery. d. An ongoing entity often has a higher purchase price due to __________. Which of the following statements regarding franchisors' long-term success are true? guidance from the franchisor Terry's Tires made just under $750,000 last year, according to the Small What is the name of the business agreement Henry would sign? training and guidance provided by the franchisor. lower 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. 5-age. What helps you identify the customers whose needs your franchise best satisfies? Jack owns a franchise. "Pro forma" accounting statements as used in business financial planning means: a statement of anticipated costs and revenues or change in assets, liabilities and equity based upon prior (operating) financial performance. Identifying one or more target markets and creating a marketing mix that has focus upon a customer grouping's needs is the definition of. Find all vertical and horizontal asymptotes of the graph of the given function. 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? Entrepreneurs tend to work harder and take moderately greater risks than persons working as employees in someone else's firm. The implementation of marketing mix variables in franchise channels is less fluid and flexible than in conventional channels. Four factors are important in determining the size and shape of a primary service area (PSA). Samantha would like to get a small business loan from the SBA. Which of the following businesses would most likely be included in the production industry? 100, Which of the following costs add to the cost of franchising? a. d. NOT: it sometimes develops an imprecise picture of the franchise. What type of competition exists? c. both of the above. majority None of the above, An analysis of the competition should look for ______. b. What pricing strategy should the firm use? Jeremy has written a business plan for the business he would like to open. Which technique is not valid for valuing a company? 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. c. Compensate the franchisee for the use of its trademark. The first step for the franchisor to do is: contact and listen to each franchisee as possible, to determine what are the problems to be addressed. a trade restriction clause. Why might it be a good idea for a franchisor to investigate several ASP vendors before choosing one? Which two factors are especially relevant in the scope and frequency of franchisee evaluations by franchisors? C) Geography Often, strategic initiatives fail because: They are seen as extra work to be accomplished in addition to existing work. B) Failure These are questions directly associated with which phase of marketing strategy for a franchise system? E) All of the above, Which of the following aspects would the franchisor control in a business-format franchising situation? it can be either franchisor- or franchisee-driven. C) Years of experience d. Attorneys and CPA firms c. The most common form of franchising today is one in whic. b. Some franchisors provide different levels of support depending on how much the franchisee is willing to pay. It is a channel used exclusively for distribution of consumer durable goods. use of private labels to brand or trademark product or service. Trade associations for the industry. Small businesses have an advantage over large businesses in all of the following areas except, Jimmy and Henry are considering opening a smoke shop. Collecting a percentage of sales from each franchisee to identify factors which may pose major threats to or provide significant opportunities for the franchise system. Chance, What is an often overlooked asset when acquiring a new business? Anastasia has started a dry cleaning business but is having difficulties with various aspects of organizing and operating the business. 1- Reduced risk of failure. Which philosophy of expansion is, as a rule, the best method for franchisors? c. Which of the following is a true statement pertaining to single-unit franchises? A. E. Number of manufacturers in the industry. 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. poll tax that required each person to pay a flat Studies have shown that the incidence of innovation among small-business workers is ___ among workers in larger businesses. the competition in the area. The control issues are: 1. He has read about the success rates of franchises and the success rates of start-up businesses. C. While the number of franchises has grown, the number of kinds of franchises has remained constant f(t)=t+2t2f(t)=\frac{t+2}{t^2} a. Entitle the franchisee to use the franchise's name. C. Training. of dollars instead of units. B. D) In military bases provide professional management training to the unit's staff. A) The franchisor instead of liquidation value. success will cause another outlet to be opened nearby. The "Federal Trade Commission" does not provide information on franchise success. What are they? Portica knows the customers of her hat shop by name and knows each of their preferences. E) Very few franchisors do inspections. Which is the most important and why? b. Which of the following is a question which can be sidestepped when buying a business? He is considering applying to small firms because he knows that small businesses have traditionally added _____ new jobs to the economy. green products According to Jim Peterson, it is important to know how customers honestly perceive the quality of the product or service offered by the franchise system. There are four types of growth opportunities for franchise systems to increase sales and share-of-market within their customer base. Henry approaches her about operating his own business under the terms above. A franchise's economic figures must be recorded, then transferred and balanced before final calculations can be determined. D. Uniform Code of Justice (UCJ) Terry's is a. Characteristics of a small business would include all of the following except. all of the above, The UFOC contains how many sections: The franchisor cannot require the individual franchisee to adhere to a(n) ________. Which of the following is Untrue about the policies and procedures of a franchise system? weaknesses. d. none of the above. The Clayton Act makes it illegal for competitors to get together and set prices on the products or services they sell. Hobby A Starbucks franchise located inside a Target store is called ___________ franchising. What is your conclusion using the p-value approach? Which of the following is an advantage to the franchisee? The individual who buys the franchise is the Which of the following statements are relevant to the definition of, "franchise"? B. Identify which generic category fits most franchise systems below. D) Removes the creativity and freedom c. c. All of these are ways a franchisor makes money; A. Franchisors provide significant operational assistance to franchisees. Franchisees may pay a fee that is separate from the royalty fee, often called a ________, to contribute to a shared advertising fund. Richard has a motorcycle and ATV store. Brenda has a small grocery store in a residential neighborhood where she primarily sells staples to the people who live in the area. a. "The Franchisor, Its Predecessors, and Affiliates" section of the UFOC _________. NOT: sufficient time to integrate the brands MAYBE: natural synergy between the brands. Which descriptor is not a part of the definition or franchising? The Federal Trade Commission regulates franchise. D. Franchisors spend billions of dollars annually to keep franchisees trained. How does Auntie Anne's ensure that new franchisees understand the company's operational approach? By immersing them in a week-long training session in an actual store, All the following explain why franchising is so widespread EXCEPT. A. new-new a. Pewterschmidt Company values its inventory reported in the financial statements in terms The term "upside gain and downside loss" refers to the profits the business can make and the losses it can suffer. d. Business related reasons for selling may include all but which of the following? Approximately what percentage of food franchises are co-branded units? A) Training a. Which of the following is NOT a component of a properly developed franchisor plan? A) Required The start-up and ongoing assistance provided by a franchisor guarantees your success. a. D. The challenges managing a franchise channel are fundamentally the same as those encountered in conventional channels. equity? Adequate frontage is a necessity for most retail businesses. Business related reasons for selling do not include which of the following? NOT: inventory management and recovery.
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