Question 1

According to the International Franchise Association (IFA), in 2007 there were almost 1,250,000 franchises established in the United States.

Accepted Answer

According to the International Franchise Association (IFA), in 2007 there were almost 900,000 franchises established in the United States.

Question 2

According to the International Franchise Association (IFA), in 2007, franchises provided about 14 million jobs.

Accepted Answer

According to the International Franchise Association (IFA), in 2007, franchises made up almost 900,000 establishments in the United States providing almost 18 million jobs.

Question 3

A franchisee makes money when the franchisor stays in business and does well.

Accepted Answer

A franchisor makes money when the franchise stays in business and does well.

Question 4

The availability of continued training opportunities should be a factor in buying a franchise.

Accepted Answer

The availability of continued training opportunities should be a factor in buying a franchise.

Question 5

The authors of our book suggest that a person interested in buying an existing business could find potential businesses to buy by talking to attorneys and CPAs for suggestions.

Accepted Answer

Several means for finding potential businesses to buy include talking to attorneys and CPA firms who may have clients who have expressed their desire to sell their business.

Question 6

When considering the purchase of an existing business, you should do a self-analysis to examine if you have the unique talent for operating the business, or if you would change the mission of the business.

Accepted Answer

The author's typical advice to entrepreneurs is not to attempt such activities unless they have specific skills and a plan to turn around a business that is in significant decline.

Question 7

In the opening case, Patrick Leon Esquerre's advisor and key supporter was:
A) Bill Gates
B) Warren Buffet
C) Donald Trump
D) none of these

Accepted Answer

Stanley Marcus of the Neiman Marcus department store chain became both an advisor to and a key supporter of Patrick.

Question 8

In the opening case, Patrick Leon Esquerre had a number of opportunities to be in the _________ industry.
A) food
B) marketing
C) retail
D) wholesale

Accepted Answer

Patrick had an increasing number of opportunities to work with people in the food industry.

Question 9

The International Franchise Association in 2007 reported there are _________ million establishments in the United States providing _________ million jobs.
A) 2; 13
B) 0.9; 18
C) 1; 15
D) 2; 12

Accepted Answer

The International Franchise Association reported in 2007 there were 900,000 or 0.9 million establishments in the United States providing 18 million jobs.

Question 10

A document called the _________ has been the accepted format for satisfying franchise requirements.
A) Uniform Franchise Offering Circular
B) United Franchising Offering Circular
C) Uniform Franchise Offering Agreement
D) United Franchise Circular Agreement

Accepted Answer

The Uniform Franchise Offering Circular has been the accepted format for satisfying franchise requirements.

Question 11

The _________ is a reliable source for locating potential franchisor firms.
A) United Franchise Association
B) International Franchise Association
C) National Franchise Association
D) Combined Franchise Association

Accepted Answer

The International Franchise Association is a reliable source for locating potential franchisor firms.

Question 12

Which of the following statements about the risk involved in buying a franchise is correct?
A) Buying a franchise can dramatically increase the risk of failure.
B) Buying a franchise can dramatically decrease the risk of failure.
C) There is no difference in the risk of buying a franchise compared to buying an existing business.
D) There is no difference in the risk of buying a franchise compared to starting a business from nothing but an idea.

Accepted Answer

Buying a franchise can dramatically decrease the risk of failure.

Question 13

Which of the following statements is correct about the level of risk involved in purchasing an existing business?
A) Buying a franchise can dramatically increase the risk of failure.
B) Buying a franchise can dramatically decrease the risk of failure.
C) Buying an existing business is less risky than buying a franchise.
D) There is no difference in the risk of buying a franchise compared to starting a business from nothing but an idea.

Accepted Answer

Buying an existing business is less risky than buying a franchise.

Question 14

Why is it a risky choice to buy an existing business that has filed for bankruptcy?
A) It takes special knowledge and skills to conduct an effective turnaround.
B) The current owner may not want to sell the business.
C) Customers may boycott the new owner due to their loyalty to the current owner.
D) Suppliers may offer extra discounts to the new owner to support the turnaround.

Accepted Answer

It is a risky choice to buy an existing business that has filed for bankruptcy because it takes special knowledge and skills to conduct an effective turnaround.

Question 15

When considering the purchase of an existing business, which of the following is NOT a question recommended by the authors of our book to ask when conducting a self-assessment?
A) Will I change the mission of this business?
B) Will I want to position the product/service differently?
C) What unique talents do I have that are directly related to the success of this business?
D) All of these are good questions to ask in a self-assessment.

Accepted Answer

When considering the purchase of an existing business, the following questions are recommended by the authors of our book to ask when conducting a self-assessment: Will I change the mission of this business?; will I want to position the product/service differently?; and what unique talents do I have that are directly related to the success of this business?

Question 16

During the period when the previous owner of an existing business is transitioning ownership to the new owner, a number of tasks should be completed. Which of the following statements is correct about these tasks?
A) If there are too many employees, enact a layoff plan immediately.
B) Make all significant changes slowly over a long period of time.
C) Ensure the former owner comes to the business every day for at least 30 days following the sale.
D) Wait at least six months before informing customers and suppliers of the sale of the business.

Accepted Answer

During the period when the previous owner of an existing business is transitioning ownership to the new owner, if there are too many employees a layoff plan must be enacted immediately.

Question 17

In the Friend's Home Health Care case study, Cheryl Williams considered which of the following franchise opportunities?
A) fast food
B) storage
C) both of these
D) none of these

Accepted Answer

Cheryl Williams considered two specific opportunities: fast food and storage.

Question 18

In the Friend's Home Health Care case study, Cheryl Williams decided upon which of the following franchise opportunities?
A) fast food
B) storage
C) both of these
D) none of these

Accepted Answer

Cheryl Williams decided upon a fast food franchise.

Question 19

In the Friend's Home Health Care case study, Cheryl Williams decided upon which of the following fast food franchise opportunities?
A) burgers and fries
B) sandwiches/wraps
C) pizza
D) none of these

Accepted Answer

Cheryl Williams decided upon a sandwich operation, utilizing a wrap that was somewhat like a tortilla.

Question 20

In the Friend's Home Health Care case study, Cheryl Williams's research on franchises concluded that:
A) the cost of a variety of franchised sandwich shops was dramatically more than that of franchised storage
B) the cost of a variety of franchised sandwich shops was dramatically less than that of franchised storage
C) the cost of a variety of franchised sandwich shops was practically the same as that of franchised storage
D) none of these

Accepted Answer

Cheryl Williams found that the cost of a variety of franchised sandwich shops was dramatically less than that of franchised storage.

Quiz 14: Franchising and Purchasing an Existing Business

According to the International Franchise Association (IFA), in 2007 there were almost 1,250,000 franchises established in the United States.

According to the International Franchise Association (IFA), in 2007, franchises provided about 14 million jobs.

A franchisee makes money when the franchisor stays in business and does well.

The availability of continued training opportunities should be a factor in buying a franchise.

The authors of our book suggest that a person interested in buying an existing business could find potential businesses to buy by talking to attorneys and CPAs for suggestions.

When considering the purchase of an existing business, you should do a self-analysis to examine if you have the unique talent for operating the business, or if you would change the mission of the business.

In the opening case, Patrick Leon Esquerre's advisor and key supporter was:

In the opening case, Patrick Leon Esquerre had a number of opportunities to be in the _________ industry.

The International Franchise Association in 2007 reported there are _ million establishments in the United States providing _ million jobs.

A document called the _________ has been the accepted format for satisfying franchise requirements.

The _________ is a reliable source for locating potential franchisor firms.

Which of the following statements about the risk involved in buying a franchise is correct?

Which of the following statements is correct about the level of risk involved in purchasing an existing business?

Why is it a risky choice to buy an existing business that has filed for bankruptcy?

When considering the purchase of an existing business, which of the following is NOT a question recommended by the authors of our book to ask when conducting a self-assessment?

During the period when the previous owner of an existing business is transitioning ownership to the new owner, a number of tasks should be completed. Which of the following statements is correct about these tasks?

In the Friend's Home Health Care case study, Cheryl Williams considered which of the following franchise opportunities?

In the Friend's Home Health Care case study, Cheryl Williams decided upon which of the following franchise opportunities?

In the Friend's Home Health Care case study, Cheryl Williams decided upon which of the following fast food franchise opportunities?

In the Friend's Home Health Care case study, Cheryl Williams's research on franchises concluded that: