Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The primary market for U.S.franchisors is Europe.

Accepted Answer

A) True 
 B)False

Question 3

In most cases,startup costs for franchises often do not include any additional fees.

Accepted Answer

A) True 
 B)False

Question 4

The only fee that franchisers can collect from franchisees is a one-time franchise fee paid at the outset of the relationship.

Accepted Answer

A) True 
 B)False

Question 5

By the 1920s,franchising was rife with fraudulent practitioners.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

One of the most litigated subjects of a franchise agreement is the termination of the contract by either party.

Accepted Answer

A) True 
 B)False

Question 8

Typically,the franchiser controls are very tight on what the franchisee:

Accepted Answer

A)  does in terms of who they hire as employees.
B)  sets in terms of retail pricing and hours of operation.
C)  does with his/her net profits after fees and taxes are paid.
D)  sells in terms of the product or service they offer.E) A) and B)
F) All of the above

Question 9

When it comes to purchasing products,equipment,etc. ,the franchiser:

Accepted Answer

A)  cannot require the franchisees buy from the franchise company.
B)  can set prices paid for the products,etc. ,but cannot set the retail price the franchisee charges.
C)  is permitted to set the retail price for the franchisee.
D)  cannot require franchisees to buy from an "approved" supplier.E) B) and D)
F) None of the above

Question 10

In a franchise arrangement,the franchiser controls the distribution methods of the business venture.

Accepted Answer

A) True 
 B)False

Question 11

McDonald's is an example of a ________ franchise.

Accepted Answer

A)  conversion
B)  trade name
C)  product distribution
D)  pureE) None of the above
F) B) and C)

Question 12

Which of the following is an indication of a dishonest franchiser?

Accepted Answer

A)  Very thorough and complete operations and training manuals
B)  Recommending retail prices and providing a list of "approved" suppliers of products and materials needed for running the franchise
C)  Attempts to discourage you from allowing an attorney to evaluate the franchise contract
D)  Not providing a set of detailed earnings projections for each potential franchiseeE) None of the above
F) All of the above

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

According to experts,the most important factor in franchising is location.

Accepted Answer

A) True 
 B)False

Question 15

The primary advantage of buying a franchise over starting your own company is:

Accepted Answer

A)  in the purchase of the franchiser's experience,expertise,and products.
B)  the fact it is much less expensive than doing your own business start-up.
C)  the extensive assistance offered in finding start-up capital.
D)  the absolute territory protection offered by all franchisers.E) B) and D)
F) B) and C)

Question 16

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

Accepted Answer

Through franchised businesses,consumers ...

Question 17

When evaluating a franchise,the potential franchisee should:

Accepted Answer

A)  interview both current and former franchisees.
B)  only interview franchise employees as franchisees vary greatly in their opinions.
C)  ask about what oral promises the franchiser will give regarding future earnings.
D)  look at the local labor market to see if there is a pool of appropriate candidates for employment.E) B) and C)
F) C) and D)

Question 18

A poor image for the entire franchise could result from some franchisees using inferior products to cut costs.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

In franchising,royalties are paid by the franchisee to the franchisor.

Accepted Answer

A) True 
 B)False

Exam 6: Franchising and the Entrepreneur

The only fee that franchisers can collect from franchisees is a one-time franchise fee paid at the outset of the relationship.

Correct AnswerverifiedShow Answer

When it comes to purchasing products,equipment,etc. ,the franchiser:

Correct AnswerverifiedShow Answer

Typically,the franchiser controls are very tight on what the franchisee:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThrough franchised businesses,consumers ...View AnswerShow Answer

A poor image for the entire franchise could result from some franchisees using inferior products to cut costs.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

McDonald's is an example of a ________ franchise.

Correct AnswerverifiedShow Answer

The primary advantage of buying a franchise over starting your own company is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a franchise arrangement,the franchiser controls the distribution methods of the business venture.

Correct AnswerverifiedShow Answer

In franchising,royalties are paid by the franchisee to the franchisor.

Correct AnswerverifiedShow Answer

According to experts,the most important factor in franchising is location.

Correct AnswerverifiedShow Answer

When evaluating a franchise,the potential franchisee should:

Correct AnswerverifiedShow Answer

One of the most litigated subjects of a franchise agreement is the termination of the contract by either party.

Correct AnswerverifiedShow Answer

By the 1920s,franchising was rife with fraudulent practitioners.

Correct AnswerverifiedShow Answer

Which of the following is an indication of a dishonest franchiser?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The primary market for U.S.franchisors is Europe.

Correct AnswerverifiedShow Answer

In most cases,startup costs for franchises often do not include any additional fees.

Correct AnswerverifiedShow Answer

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Through franchised businesses,consumers ...
View Answer

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