Question 1

Organizations that decide to franchise (franchisors) have __________ expansion costs in opening new outlets accompanied by __________ control compared to owning their own retail outlets.

Accepted Answer

Franchisors typically have reduced expansion costs because franchisees bear the cost of opening new outlets. However, franchisors have reduced control over these outlets compared to owning them directly.

Question 2

There are two general types of franchises:

Accepted Answer

Business-format franchises provide a complete system for operating the business, and product-distribution franchises only distribute the franchisor's products. Therefore, the best choice is C as it includes both business-format franchises and product-distribution franchises.

Question 3

The area of automotive franchises is a vast one - from glass repairs and painting to car rentals and auto maintenance franchises.Midas, Mister Transmission, Mr.Lube, RentAWreck, and Speedy Muffler are all examples of _________.

Accepted Answer

Midas, Mister Transmission, Mr.Lube, RentAWreck, and Speedy Muffler are all examples of business-format franchises, as they provide a complete business system to the franchisee, including training, marketing, and ongoing support. These franchises also require the franchisee to follow certain standardized procedures and use specific products and services.

Question 4

In this type of franchising, the company uses the agreement as a method for the distribution of its products.Chrysler, Ford, and Coca-Cola gives the franchisee the right to use the brand name of the franchisor to sells its products.

Accepted Answer

The description given indicates that this type of franchising involves using the agreement for the distribution of products, which is known as a product-distribution franchise. The examples given, such as Chrysler, Ford, and Coca-Cola, also suggest this type of franchising as they are primarily focused on the distribution of their products.

Question 5

Loehmann distinguishes themselves as preeminent, upscale, off-price specialty retailers for name band designer fashions.They offer in-season merchandise and frequent new arrivals at prices 30% to 65% less than department store prices.Loehamann retailers provide consumers with

Accepted Answer

Loehmann's, as an off-price retailer, typically offers limited service, focusing on providing discounted designer fashions rather than extensive customer service.

Question 6

As a franchisor, Radio Shack would assist a franchisee in selecting the store location, setting up the store, advertising, and _________.

Accepted Answer

Franchisors typically provide training to ensure that franchisees and their staff understand the business operations and standards.

Question 7

McDonald's, iHop, and Subway are all _________.

Accepted Answer

McDonald's, iHop, and Subway are all examples of business-format franchises, where the franchisee is given a complete business model to follow, including branding, marketing, operations, and training, in exchange for fees and royalties. Product-distribution franchises, on the other hand, usually involve the franchisee selling or distributing a specific product under the franchisor's brand name, such as Coca-Cola or Pepsi. Business franchise venture, manufacturing franchises, and general service franchises are not established categories in the franchising industry.

Question 8

FIGURE 14-1 
-Subway (see image in Figure 14.1 above) is a popular _________.

Accepted Answer

Subway is a business-format franchise, where the franchisor provides the franchisee with a complete system for operating the business, including brand name, products, recipes, marketing, training, and support. The franchisee operates the business using the franchisor's system and pays fees and royalties for the right to use the system and the brand name. Therefore, option A is the best choice.

Question 9

General merchandise stores such as Walmart, Kmart, and Target are usually considered as _________ outlets.

Accepted Answer

The answer of General merchandise stores such as Walmart, Kmart,...

Question 10

Costco requires customers to perform many shopping functions themselves, and little is provided by the outlet.All nonessential customer services are eliminated.What level of service is being offered by Costco?

Accepted Answer

Costco is offering self-serve service as customers are required to perform many shopping functions themselves and no nonessential customer services are provided.

Question 11

A franchise where the franchising company uses an agreement method for the distribution of its products is known as a

Accepted Answer

A product-distribution franchise is a type of franchise where the franchising company grants the franchisee the right to sell and distribute its products within a specific territory or market. The franchisor typically provides the franchisee with products, marketing materials, and support in exchange for a fee or commissions on sales. This type of franchise agreement does not involve the use of the franchisor's business format, systems, or trademarks, which are typically associated with a business-format franchise.  Therefore, option A is the most appropriate choice.

Question 12

There are two general types of franchises: business-format franchises and __________ franchises.

Accepted Answer

Product-format franchises are a type of franchise in which the franchisor licenses the franchisee to use its trademarks, trade name, and other intellectual property to sell a specific product or line of products.

Question 13

A franchise where the franchisor usually assists in selecting the location, setting up the store or facility, advertising, and training personnel is known as a

Accepted Answer

A business-format franchise is characterized by the franchisor providing extensive support and guidance to the franchisee, including assistance with location selection, facility setup, advertising, and personnel training. This type of franchise offers a complete business model for the franchisee to replicate, rather than simply distributing a product or service.

Question 14

The three commonly used terms to describe levels of service are:

Accepted Answer

Self-service refers to minimal assistance and reliance on customers to complete tasks, limited service refers to some assistance but not full-service treatment, and full service refers to extensive assistance and personalized treatment to meet customers' needs. These terms are commonly used in the retail industry to describe the level of service provided to customers.

Question 15

The level of service that requires that the customers perform many functions and little is provided by the outlet is _________.

Accepted Answer

Self-serve level of service requires that the customers perform many functions themselves and little is provided by the outlet. Customers are responsible for everything from placing their own order to clearing their own table. Examples of self-serve outlets include gas stations, vending machines, and salad bars.

Question 16

Dominion is a Canadian supermarket.Recently, it began its Baby Club program, which mails members a $20 gift certificate when they purchase a certain dollar amount of infant products.By offering this and similar loyalty-type programs, Dominion is trying to

Accepted Answer

By offering a loyalty-type program that rewards customers for purchasing a certain dollar amount of infant products, Dominion is trying to move from self-service to limited service. This program encourages customers to make larger purchases and promotes customer loyalty by rewarding them for their frequent purchases.

Question 17

Off-price retailers, retail clubs, and grocery stores provide what level of retail service?

Accepted Answer

Off-price retailers, retail clubs, and grocery stores typically provide self-service, allowing customers to select and purchase products with minimal assistance from staff.

Question 18

The days of taking your groceries through the checkout yourself have arrived in the United States.A number of U.S.- based retail chains have begun using U-scan machines in their outlets.This is an example of what level of retail service?

Accepted Answer

The use of U-scan machines for customers to scan and bag their own groceries exemplifies self-service retail, where customers perform many of the tasks themselves without the help of store employees.

Question 19

As a business-format franchisor, McDonald's provides step-by-step procedures for most aspects of the business and

Accepted Answer

As a business-format franchisor, McDonald's provides guidelines for the most likely decisions a franchisee will face. They provide not only step-by-step procedures but also guidelines for decision-making to help the franchisees run their business effectively. The other options mentioned in the question are not part of a typical franchisor's responsibilities.

Question 20

When customers are responsible for most shopping activities at a retail outlet, these outlets would be classified as __________ outlets.

Accepted Answer

The answer of When customers are responsible for most shopping...

Quiz 14: Retailing and Wholesaling

Organizations that decide to franchise (franchisors) have expansion costs in opening new outlets accompanied by control compared to owning their own retail outlets.