Question 1

To control costs when purchasing a business,an attorney at the closing can represent both sides.

Accepted Answer

It would be a conflict of interest for an attorney to represent both sides in a transaction. Each side should have their own attorney to ensure their best interests are represented.

Question 2

Annabell has been granted the right to conduct business according to specified methods and terms of another party.Annabell is a:

Accepted Answer

A franchisee is a person who is granted the right to conduct business according to specified methods and terms of another party. The franchisor is the party who grants these rights and the franchise is the business arrangement between the two parties. A licensee is a person who has been granted the right to use a specific product, service, or technology.

Question 3

Sister Mary Cupcake has partnered with the management of the toll road to operate her stores in the travel plazas.This arrangement is an example of:

Accepted Answer

Piggyback franchising is when a franchisee partners with an existing business or location, such as a toll road travel plaza, to operate their franchise within that location. This allows the franchisee to benefit from the existing traffic and customer base, while the existing business benefits from the added convenience and amenities.

Question 4

Jeffrey's job is to identify potential business people in his country who might want to do business using a particular brand name.When the contract is signed,Jeffrey then provides training to the business person.Jeffrey is most likely:

Accepted Answer

The answer of Jeffrey's job is to identify potential business...

Question 5

Belinda signed a _____________ that is a legal agreement between two parties in a franchise arrangement.

Accepted Answer

A franchise contract is a legal agreement between two parties in a franchise arrangement. It outlines the terms and conditions under which the franchisee may operate the business, including the use of the franchisor's trademarks and business systems, as well as the payment of fees and royalties. A master license refers to a type of franchise agreement where the franchisor grants the franchisee the right to sub-franchise within a specific territory. A requirements contract is a type of contract where one party agrees to purchase all of their goods or services from the other party. A franchise consent draft is not a commonly used term in franchising.

Question 6

Abner signed a contract allowing him to use Brian's business model and sell products approved by Brian.Abner is:

Accepted Answer

Abner is a franchisee, as he has signed a contract allowing him to use Brian's business model and sell approved products. A franchisee is an individual who enters into a contractual agreement with a franchisor to sell the franchisor's products or services under the franchisor's brand name and system.

Question 7

Rick was so successful with his Sweet Treats franchise that he opened several other Sweet Treats locations.Rick could best be described as:

Accepted Answer

Rick's success with opening several Sweet Treats locations makes him a multiple-unit owner. A franchisor is the company that grants the franchise rights to others, a franchisee is the individual or business that buys the rights to operate the franchise, and a master licensee is a third party that has been granted the right to sub-franchise within a certain territory.

Question 8

Martina's franchise agreement allows her to open up to seven new stores within a 100 mile radius of the first one.Martina is best described as:

Accepted Answer

Martina is an area developer because she has the right to open up to seven new stores within a 100 mile radius of the first one.

Question 9

Edward signed a contract allowing Francine to use sell products using his brand name so long as the product meets Edward's quality standards.Edward is:

Accepted Answer

Edward is the franchisor in this situation as he is allowing Francine to use his brand name and quality standards for her products.

Question 10

Business format franchising is best illustrated by the system offered by

Accepted Answer

Subway is the best example of business format franchising because the franchisor provides a complete system for running the business, including branding, recipes, training, and ongoing support. Franchisees must follow strict guidelines and pay a percentage of their sales to the franchisor in exchange for the right to use the brand and system. This allows for consistency across all Subway locations and easy replication of successful business models.

Question 11

Caron signed a contract with Devon allowing her to provide services using Devon's trademark,logo,and business model.This business is:

Accepted Answer

Caron is operating a franchise, as she is using Devon's trademark, logo, and business model to provide services.

Question 12

McDonald's corporation helps select the location for a new restaurant and provides financial assistance,training,marketing,and products.McDonald's engages in:

Accepted Answer

McDonald's engages in business format franchising, where they provide assistance and support in multiple areas of operating a franchise location, including location selection, financial assistance, training, marketing, and products.

Question 13

Individuals or firms that possess the legal right to open multiple outlets in a given area are referred to as

Accepted Answer

Area developers are the individuals or firms that possess the legal right to open multiple outlets in a given area. They are responsible for developing and managing a certain geographic territory, often with the intention of opening several franchise locations within that region. Development franchisees focus on helping to expand the brand's presence by opening new franchise locations in different areas. Piggyback franchisees are those who operate two or more different franchises simultaneously to reduce costs and increase profit. Multiple-unit owners are the owners of multiple independent businesses, not necessarily franchises.

Question 14

Matthew is an individual acting as a sales agent with the responsibility for finding new franchisees within a specified territory.Matthew is a(n):

Accepted Answer

The answer of Matthew is an individual acting as a...

Question 15

The agreement Irma signed with McDonald's that allows her to open a restaurant using the McDonald's name is:

Accepted Answer

The agreement Irma signed with McDonald's is a franchise contract, which allows her to operate a restaurant using the McDonald's name and business system while adhering to specific guidelines and paying fees to the parent company.

Question 16

A Starbucks franchise located inside a Target store is called ______ franchising.

Accepted Answer

The term for a franchise that is located inside another business or establishment is called piggyback franchising. In this case, Starbucks is the piggyback franchise and Target is the host business.

Question 17

Quality Dining,Inc.operates several different restaurant franchises including Burger King,Olive Garden,Dairy Queen,and several others.Quality Dining has its own corporate structure and stockholders.This corporation is an example of:

Accepted Answer

Quality Dining, Inc. operates multiple franchise brands under a single corporation, making it an example of multibrand franchising.

Question 18

Geraldo owns a well-known brand and allows Henry to sell products with that brand name.Geraldo has agreed to:

Accepted Answer

In product and trade name franchising, the franchisee is given the right to use the franchisor's product and trade name. In this case, Geraldo is allowing Henry to sell products with his brand name, which fits the definition of product and trade name franchising. Business format franchising involves a more comprehensive sharing of the franchisor's entire business system, while master licensing involves the franchisor granting the right to sell a specific product or service in a specific territory to a third-party licensee. Co-branding involves two or more brands working together to create a new product or service.

Question 19

JKL Corporation grants another party the right to conduct business according to specified methods and terms.JKL is a:

Accepted Answer

A franchisor is a company or individual that grants a franchise to another party, allowing them to conduct business using the franchisor's methods and terms. Therefore, JKL Corporation granting the right to conduct business according to specified methods and terms makes them a franchisor.

Question 20

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

Accepted Answer

Multiple-unit ownership is the franchising strategy in which an individual or firm is granted the legal right to own more than one unit of a franchised business. Multi-brand franchising involves owning multiple franchises of different brands. Piggyback franchising is when a franchisee adds a complementary product or service to an existing business. Aggregate ownership is not a recognized term in franchising.

Quiz 4: Franchises and Buyouts