Deck 8: The Franchise Alternative: How Do I Buy a Franchise

Question 1

On average, buying a franchise:

A)is the lowest risk start-up method.
B)has the same risk as starting a brand new business.
C)has the same risk as buying an existing independent firm.
D)is risk-free.

Answer 1

A

Question 2

The Franchisor is the buyer of a complete method of doing business.

Answer 2

False

Question 3

Canada tends to have stricter franchising regulations than most of the US.

Answer 3

False

Question 4

Which of the following would be an example of a Business Format franchise?

A)Petro Canada.
B)Tim Horton's.
C)Toyota.
D)Popsicle.

Question 5

The right to produce and sell the franchisor's product is called:

A)licensing.
B)dealership.
C)conversion franchising.
D)none of the above.

Question 6

The code of the Canadian Franchise Association gives franchisees:

A)freedom to form and join associations.
B)the right to see the financial statements of the franchisor.
C)the right to a full refund if dissatisfied.
D)all of the above.

Question 7

Franchisors such as automobile manufacturers can dictate the prices charged by their franchisees.

Question 8

The most popular franchise arrangement is:

A)single-unit.
B)multi-unit.
C)multi-brand.
D)master franchise.

Question 9

Buying an existing franchise is legally simpler than buying a new one.

Question 10

The biggest advantage of owning a franchise over an independent firm is likely:

A)training provided by the franchisor.
B)brand recognition.
C)advertising.
D)marketing research.

Question 11

Most of the magazines and other publications about franchising:

A)are critical of the industry.
B)forbid advertising of specific franchises.
C)are published by franchisor associations.
D)are published by franchisee associations.

Question 12

With "floor plan" financing, title to the product in the franchisee's inventory is:

A)held by the franchisee.
B)held by a third party.
C)held by the franchisor.
D)there is no title to the product.

Question 13

Major franchisors tend to be highly negotiable over contract details.

Question 14

The cost of a franchise may include:

A)royalty payments.
B)advertising expenditures.
C)the franchise fee.
D)all of the above.

Question 15

The owner of a territory franchise has the right to sell franchises to others.

Question 16

The ability to innovate is an important characteristic for a franchisee.

Question 17

Dealership franchising tends to give the franchisee more freedom than business format franchising.

Question 18

Multi-level marketers usually:

A)work from their homes.
B)sell to consumers.
C)receive commissions from the sales of their recruits.
D)all of the above.

Question 19

Most Multi-level Marketers make well-above-average incomes.

Question 20

Pyramid Selling is an illegal form of Multi-level Marketing.

Question 21

Briefly explain the major advantages of buying a franchise over other start-up methods.

Question 22

Explain the major provisions of existing or pending franchise legislation.Explain the growing trend for disclosure requirements.