25) The formula provided by the franchise does which of the following?
A) Guarantees brand recognition
B) Eases the issues of start-up development
C) Ensures ongoing support
D) Removes the creativity and freedom
E) All of the above
Learning Obj.: LO 2
AACSB: Reflective thinking
26) Franchisors are ________ to provide operating manuals and training to their franchisees,
which are a valuable resource for success.
A) Required
B) Not required
C) Encouraged
D) Unable
E) None of the above
Learning Obj.: LO 2
AACSB: Analytical thinking
27) Franchisors are focused on creating wealth for ________.
A) Themselves
B) Friends
C) Franchisees
D) The community
E) Employees
Learning Obj.: LO 2
AACSB: Analytical thinking
28) A franchisor’s record of success can ________.
A) Provide a significant advantage for your business start-up
B) Be a concern for a franchisee
C) Never provide help for start-up
D) Be proven
E) Not be counted on
Learning Obj.: LO 2
AACSB: Analytical thinking
7
29) All of the following are advantages of franchising except ________.
A) Training
B) Financing assistance
C) Purchasing power
D) Promotional support
E) Loss of control
Learning Obj.: LO 2
AACSB: Analytical thinking
30) All of the following are selected franchise fees and costs according to the text, except
________.
A) Training
B) Advertising and promotion
C) Fixtures
D) Initial inventory
E) Local publicity campaigns
Learning Obj.: LO 2
AACSB: Analytical thinking
31) The franchisor is the second party to the franchise agreement and is the owner of the unit or
territory rights.
Learning Obj.: LO 1
AACSB: Analytical thinking
32) 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.
Learning Obj.: LO 2
AACSB: Application of knowledge
33) As a franchisee you will benefit from the purchasing power of the franchisor to get lower
costs and improved vendor service.
Learning Obj.: LO 2
AACSB: Application of knowledge
8
34) If you are looking to start a business that is creative and is not controlled by others, then
franchising is your best option.
Learning Obj.: LO 2
AACSB: Analytical thinking
35) McDonalds is the only franchise available for ownership internationally.
Learning Obj.: LO 6
AACSB: Application of knowledge
36) 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.
Learning Obj.: LO 1
AACSB: Reflective thinking
37) There is no need for legal representation when entering into a franchise agreement.
Learning Obj.: LO 4
AACSB: Analytical thinking
38) Master franchises do not allow individuals and organizations to buy the right to subfranchise
within a delineated geographic territory.
Learning Obj.: LO 1
AACSB: Application of knowledge
39) There are few resources for franchise research.
Learning Obj.: LO 5
AACSB: Analytical thinking
40) It is uncommon for a franchisor to handle the national and regional media purchasing for a
franchisee.
Learning Obj.: LO 2
AACSB: Reflective thinking
9
41) 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.
Learning Obj.: LO 2
AACSB: Analytical thinking
42) A franchise is a business that markets a product or service developed by a franchisor,
typically in the manner specified by the franchisor.
Learning Obj.: LO 1
AACSB: Analytical thinking
43) The start-up and ongoing assistance provided by a franchisor guarantees your success.
Learning Obj.: LO 2
AACSB: Analytical thinking
44) The most significant advantage for a franchisee is the increased probability of success.
Learning Obj.: LO 2
AACSB: Analytical thinking
45) The costs of franchises vary significantly.
Learning Obj.: LO 2
AACSB: Analytical thinking
46) Apply the steps of franchise selection to your business idea. Identify the most critical steps
for your situation and how these issues would help you determine the best franchise opportunity.
Learning Obj.: LO 5
AACSB: Reflective thinking
10
47) If you were to become a franchisee, which type of franchise would you choose? Discuss
possible concerns and advantages of different franchise types.
Learning Obj.: LO 1
AACSB: Analytical thinking
48) What franchising issues would you need legal assistance to address? How would that affect
your decision to franchise or not to franchise?
Learning Obj.: LO 4
AACSB: Reflective thinking
49) What are some of the positive aspects of franchises that could assist you with your business
idea? What advantages could you utilize in start-up, operations, competitive advantage, and so
on?
Learning Obj.: LO 2
AACSB: Analytical thinking
50) What are some of the key drawbacks of buying a franchise? How could these issues hinder
your business?
Learning Obj.: LO 2
AACSB: Reflective thinking
11