Deck 11: Sales

Question 1

For a fast-food franchise,typical royalties range from:

A)1-2 percent
B)3-8 percent
C)8-12 percent
D)12-15 percent

Answer 1

B

Question 2

In this format,a franchisor grants you (the master franchisee)the right not only to operate an outlet in a specific territory but also to sell subfranchises to others within that same territory.

A)Single-unit franchise
B)Area franchise
C)Master franchise
D)Corporate franchise

Answer 2

C

Question 3

Franchising is a legal and commercial relationship between the owner of a trademark,trade name,or advertising symbol and an individual or group of people seeking the right to use that identification in a business.

Answer 3

True

Question 4

After you have identified one or two possibility choices for a franchise opportunity,the next step is to:

A)Meet with the corporate headquarters
B)Request a promotional kit from each of the franchisors
C)Go to the bank to secure financing
D)Make an appointment with a lawyer

Question 5

Franchising is based on mutual trust and a legal relationship between the two parties.

Question 6

All of the following are trends in the future of franchising,except:

A)Pet care
B)Home improvements
C)Fitness
D)Horticulture

Question 7

All of the following are advantages of franchising your business,except:

A)Since franchisees use their own capital you have no investment at the unit level so you can leverage the assets of these franchisees.
B)Because you have a smaller investment in the overall business,your ROI should be significantly higher.
C)Establishing franchises can enable you to grow much faster without increasing your investment or adding more employees.
D)Franchisees are less motivated since they think everything will be controlled by the owner.

Question 8

The application form will likely request all of the following information,except:

A)The value of your net assets
B)Your name and mailing address
C)Your religion
D)The names of any fraternal or civic organization to which you might belong

Question 9

Virtually all franchise arrangements contain all of the following elements,except:

A)A continuing relationship between two parties
B)A legal contract that describes the responsibilities and obligations of each party
C)A succession plan
D)Tangible and intangible assets (such as services,trademarks,and expertise)provided by the franchisor for a fee

Question 10

The application form normally requires you to provide a deposit,typically in the range of:

A)$100-$250
B)$500-$1000
C)$2000-$5000
D)$5000-$10000

Question 11

All of the following are examples of a product distribution arrangement,except:

A)Coke
B)Pepsi
C)BMW
D)McDonalds

Question 12

This format involves a franchisor's granting you the right to establish more than one outlet within a specified territory.

A)Single-unit franchise
B)Area franchise
C)Master franchise
D)Corporate franchise

Question 13

This type of franchising may be a means of achieving certain economies of scale and perhaps a lower average franchise cost.

A)Single-unit franchise
B)Area franchise
C)Master franchise
D)Corporate franchise

Question 14

Which of the following personal characteristic is generally of the most importance to franchisors?

A)Credit and financial standing
B)Previous work experience
C)Personality
D)Educational background

Question 15

All of the following are considered disadvantages of buying a franchise,except:

A)Loss of independence
B)Misrepresentation by the franchisor
C)Misunderstanding the franchise agreement
D)Easier access to financing and reduced cash requirements

Question 16

Which of the following is an example of an entire business format franchising arrangement?

A)Tim Hortons
B)General Motors
C)Ford
D)Coke

Question 17

Royalties are usually:

A)Calculated as a percentage of the gross sales
B)Calculated as a percentage profits
C)A fixed monthly expense
D)Set up depending on what the individual can afford to pay

Question 18

Which of the following is not an advantage to buying a franchise?

A)A proven system
B)Reduced risk
C)Loss of independence
D)Purchasing power

Question 19

This type of franchising is the fastest way for a franchisor to expand.

A)Single-unit franchise
B)Area franchise
C)Master franchise
D)Corporate franchise

Question 20

This type of franchise is the most popular and simplest format.

A)Single-unit franchise
B)Area franchise
C)Master franchise
D)Corporate franchise

Question 21

Only Alberta,Manitoba,Ontario,Prince Edward Island,and New Brunswick have legislation specifically related to franchise disclosure.

Question 22

A key element in the success of many franchise organizations is the sameness of each of the franchise outlets.Explain.

Question 23

As a growth strategy,franchising can provide you with the ability to improve your market share by increasing your number of points for distributing your product or service.

Question 24

Of the top ten franchises in Canada in 2012,only very few were actually fast-food restaurants.

Question 25

Franchisees have minimal obligations and are never subject to inspection or supervision.

Question 26

Most franchisees generally want to have the franchisor agree not to operate or grant a franchise to operate another franchised outlet too close to their operation.

Question 27

In order to franchise your business,you must have a successful business concept that can be readily replicated in other locations.Describe four criteria which can assess the readiness of a company for franchising and the likelihood it will be successful as a franchisor.

Question 28

In addition to the initial fee you must pay to buy a franchise,are there any other ongoing fees?

Question 29

What are some of the obligations imposed on the franchisee?

Question 30

Franchisors are not required by law in Ontario to provide prospective franchisees with a disclosure document.

Question 31

What are the common elements included in virtually all franchise arrangements?

Question 32

List five of the obligations undertaken by the franchisor.

Question 33

If you make the decision to franchise,the next step is to develop both a business plan and a detailed operations manual.

Question 34

Describe three future trends in franchising.