Franchising Management
Midterm Exam
Course Introduction
Franchising Management explores the fundamental principles, processes, and strategies involved in establishing, operating, and expanding franchise businesses. The course covers the legal and financial frameworks of franchising, the roles and responsibilities of franchisors and franchisees, and the development of franchise agreements. Students will analyze case studies on successful and unsuccessful franchises, examine methods for maintaining brand consistency, and evaluate best practices in recruitment, training, and support systems. Emphasis is placed on risk assessment, ethical considerations, growth strategies, and adapting to changing market dynamics within franchised organizations.
Recommended Textbook
Franchising 4th Edition by Richard J. Judd
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22 Chapters
209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/study-set/1324
Page 2
Chapter 1: Franchising: History and Overview
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) Composite data about the franchise industry itself suggests which approach to franchising continues to experience strong growth:
A)product- and trade-name franchising
B)business format franchising
C)co version franchising
D)all of the above are growing about equally
Answer: B
Q2) The approach to be used by a franchisee in providing the franchisor's products or services to the customer is called:
A)business licensing
B)free-form business opportunity
C)business format franchising
D)an open business opportunity
Answer: C
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3
Chapter 2: Recognizing Franchising Opportunities
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) A primary consideration for a potential franchisee is that the capital required to become a franchisee will likely be:
A)much greater than it would be for starting an independent business in the same field.
B)much less than it would be for starting an independent business in the same field
C)the amount of capital required is not of great concern to franchisor or franchisee.other factors are more important.
D)about the same or potential more for starting a franchise business compared to starting an independent business in the same field.
Answer: D
Q2) Which one of the following is NOT an advantage of franchising for the franchisee?
A)established product or service
B)technical and managerial assistance
C)quality control standards
D)expansion
Answer: D
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Chapter 3: The Franchisor Business Plan
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) Which of the following is often referred to as the franchisee's "bible"?
A)the franchisor's business plan
B)the franchising agreement or contract
C)the PERT chart
D)the operations manual
Answer: D
Q2) The two main reasons for failure in business are:
A)lack of capital and poorly chosen location
B)poorly chosen location and inadequate business plan
C)poor management and lack of capital
D)inadequate business plan and poor management
Answer: C
Q3) A realistic estimate for the cost of legal requirements to begin a franchising system could be:
A)$5,000
B)$10,000
C)$20,000
D)$50,000
Answer: C
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Chapter 4: Franchisor Management, Organization and Administrative Policy
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Sample Questions
Q1) There are four types of growth opportunities for franchise systems to increase sales and share-of-market within their customer base.Which one below is not one of these tried-and-true approaches for growth?
A)Retain existing customers.
B)Stimulate more purchase within your existing customer base.
C)Offer new products/services in new territories to new customers
D)Cross-sell complementary products/services that meet new or a different combination of existing customer needs.
Q2) One who owns and operates more than one franchise unit is known as a
A)Area Developer
B)Master Franchisee
C)Multi-unit Franchisee
D)Franchise Broker
Q3) Often,strategic initiatives fail because:
A)They are seen as extra work to be accomplished in addition to existing work.
B)They are not announced at a party at the home office.
C)Being strategic,they are developed only the owner/franchisor
D)Competition finds out about them,and beats the firm "to the punch."
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Chapter 5: The Franchise Marketing Process
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11 Verified Questions
11 Flashcards
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Sample Questions
Q1) According to the U.S.Census,( )are the fastest growing segment of small business ownership today.
A)immigrant entrepreneurs
B)Mompreneurs
C)Gen-Yers
D)Baby Boomers
Q2) What exactly is to be done in each segment? When will the activities be started and completed? Who is responsible for these activities and outcomes? And,how much will it cost to implement? These are questions directly associated with which phase of marketing strategy for a franchise system?
A)product mix decisions
B)plans of action
C)target markets
D)threats and opportunities
Q3) Which one of the following is Not one of the "Four P's" in marketing?
A)product
B)process
C)price
D)promotion
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Page 7
Chapter 6: Selling Franchises and Marketing Research
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) Which of the following is NOT one of the four P's of selling?
A)power
B)pleasure
C)profit
D)practice
Q2) How might you describe the professional approach to sales?
A)talks 70%,listens 30%
B)pushy
C)customer oriented
D)faster
Q3) What helps you identify the customers whose needs your franchise best satisfies?
A)target marketing
B)marketing research
C)inquiries
D)a professional approach to sales
Q4) What is a realistic number for a sample size when doing market research?
A)50
B)300
C)500
D)1,000
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Chapter 7: Co-Branding
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5 Verified Questions
5 Flashcards
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Sample Questions
Q1) What crucial element is necessary for the success of co-branding partners?
A)sufficient time to integrate the brands
B)natural synergy between the brands
C)distinctive differences between the brands
D)a strong personal relationship between the franchisors
Q2) Approximately what percentage of food franchises are co-branded units?
A)5 %
B)20%
C)50%
D)75%
Q3) Which of the following is true about co-branding?
A)it is primarily franchisor-driven.
B)it is primarily customer-driven.
C)it is primarily franchisee-driven.
D)it can be either franchisor- or franchisee-driven.
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Chapter 8: Managing the Franchisors Operations Process
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) The general purpose of a promotions package by the franchisor to potential franchisees is to:
A)solicit and sign franchisees
B)inform potential franchisees about the business in general terms only
C)learn as much about potential franchisees while sharing limited brochure materials about the franchise system,
D)none of the above
Q2) Part of the motivation for a franchisor to develop a franchise system is to ensure consistency throughout the business units in the system.Which type of franchisor manual is specifically focused to this purpose?
A)pre-opening manual
B)site inspection manual
C)record keeping manual
D)communications manual
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Chapter 9: Location and Site Selection
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Sample Questions
Q1) Which crucial factor would most likely mean the difference between success and failure for a potential franchise unit?
A)management practices
B)owner's knowledge and skill level
C)location
D)all of the above are equally important to the success or failure of the franchise.
Q2) Two primary points must be considered when a franchisor develops expansion plans for a franchise.What are they?
A)distribution and number of existing franchises
B)overhead and distribution
C)overhead and franchisor's previous experience with expansion
D)number of existing franchises and franchisor's previous experience with expansion
Q3) Which philosophy of expansion is,as a rule,the best method for franchisors?
A)the shotgun approach
B)the rifle shot approach
C)seeding
D)whichever method the franchisor deems appropriate for a their particular business
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11
Chapter 10: Accounting and Financial Statements:
and Uses
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Sample Questions
Q1) Franchisors capitalizing or financing their businesses are generally required to disclose three key financial statements.Which of the following is not one of those statements?
A)income statement or operating statement
B)balance sheet or statement of financial position
C)net profit statement or bottom line
D)cash flow or cash budget statement
Q2) Which of the following is like a "snapshot" of the franchise's fiscal condition?
A)the cash flow statement
B)the balance sheet
C)the income statement
D)the bottom line
Q3) Which of the following types of financial ratios measures how well a franchise meets its short-term debts or financial obligations?
A)liquidity
B)profitability
C)activity
D)coverage/leverage
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Chapter 11: Financial Management and Fiscal Planning
Tools and Techniques
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) The cash flow statement is used to plan:
A)liquidity for the firm
B)profitability for the firm
C)anticipated costs of operation
D)asset utilization for the business
Q2) Often considered the most critical financial component of working capital is
A)marketable securities
B)inventory management and recovery
C)cash
D)accounts receivable
Q3) Estimation of sales and other income for a period and cash disbursements to be paid in the same period identifies the components of the:
A)balance sheet
B)income statement
C)cash flow statement
D)none of the above.
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Chapter 12: Information Systems in Franchising
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Sample Questions
Q1) What is the primary purpose of information systems in a mid-size franchise?
A)to improve operations at franchisor's headquarters
B)to leverage working knowledge
C)to generate data which can be used to accumulate working knowledge
D)to increase profits
Q2) What is the primary purpose of information systems in a start-up franchise?
A)to improve operations at franchised units
B)to improve operations at franchisor's headquarters
C)to generate data which can be used to accumulate working knowledge
D)to leverage working knowledge and increase profits
Q3) Which of the following is NOT an element of virtual relationship management in e-business strategy?
A)collaboration with suppliers through Internet
B)collaboration with suppliers through Extranet
C)collaboration with consumers through Internet
D)intra-enterprise collaboration through Intranet
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14
Chapter 13: Franchise Legal Documents
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5 Verified Questions
5 Flashcards
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Sample Questions
Q1) When must the disclosure document be delivered,according to the FTC Rule?
A)at the first personal,face-to-face meeting
B)10 business days before the franchisee executes a binding legal document or makes any payment
C)whichever of these comes first
D)whenever the franchisor deems it appropriate
Q2) What sort of disclosure document is required by the FTC Rule?
A)the format prescribed by the FTC
B)the UFOC,or uniform franchise offering circular
C)both of the above formats
D)one of the above formats
Q3) Which of the following allows a developer to build a num?ber of franchised businesses in a particular market area?
A)Franchise Agreement
B)Sub-Franchising Contract
C)Area Development Agreement
D)UFOC
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Chapter
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Sample Questions
Q1) When does a trade secret become enforceable?
A)when it is developed
B)when it is filed with a federal agency
C)when a Confidentiality Agreement is signed
D)when it is shared with a certain percentage of the firm's employees
Q2) When do copyright laws go into effect for a written work?
A)when the work is published
B)when the work is written
C)when the work is registered
D)when a copyright notice is attached to it
Q3) Which of the following documents outlines how the intellectual property of the franchise is to be used by the franchisee?
A)the Confidentiality Agreement
B)the Intellectual Property Contract
C)the Franchise Agreement
D)the Operations Manual
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16
Chapter 15: Investigating Franchise Opportunities
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) The four "P's" of franchise include all of the following except:
A)product
B)profitability
C)promise
D)people
E)process
EASY
Q2) About ( )percent of franchise systems provide some form of earnings claims for franchisees?
A)5 percent
B)about 25 percent
C)about 40 percent
D)about 70 percent
Q3) For a new franchisee joining a solid franchise system
A)much of the guesswork of running a business is removed.
B)most of the mistakes made by an independent entrepreneur will be experienced
C)the new franchisee is yet to learn and resolve all the "kinks" of running a business
D)all of the above are true
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Chapter 16: Financing Your Franchised Business
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Sample Questions
Q1) Preparing a financial package by a franchisee is meant to assist in the generation of equity investment or debt backing for the startup and operation of the business venture.When preparing the financial package for presentation,the first parties to consider when writing the financial package should be:
A)the franchisor
B)other franchisees of the same franchise system
C)the area developer or Director of Franchising for the franchise system
D)the local bank,loan office or investor to understand the operations,functions and potential profitability of the franchise.
Q2) The franchisee's major financial obligation is to:
A)the Internal Revenue Service
B)one's State Department of Revenue
C)City or County health department
D)the franchisor
Q3) The primary goal of any franchise company is to:
A)make a Profit
B)have ever-increasing sales
C)expand internationally
D)lobby Congress for exceptions to Rule 436.1.
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Page 18
Chapter 17: Marketing the Franchisee Business
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8 Verified Questions
8 Flashcards
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Sample Questions
Q1) Casual dining places have,generally,targeted which group as their primary customer group?
A)children between ages 2-10
B)senior citizens with disabilities
C)college freshmen
D)adults of all ages
Q2) Marketing research in franchising is done primarily by
A)the franchisor
B)the independent franchisees
C)both franchisor and franchisee collaboratively
D)contracted outside survey research firms.
Q3) Over time,most franchisors have developed a system for providing marketing services to franchisees.These services usually include three of the following.Which service is generally not included?
A)stock-option purchase into the franchise system itself
B)a franchisee's grand opening package
C)continuing advertising support
D)other marketing and promotional items
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19
Chapter 18: Managing the Franchisee Business Stage Six:
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Sample Questions
Q1) Among the actions a franchisor may not engage in the following except:
A)requiring a franchisee to buy a product(s)in order to acquire the product the franchisee wants to purchase
B)mandating the price / a franchisee must charge customers for a product
C)promote a nation-wide sales promotion for products/services sold by franchisees
D)only provide sales and financial projections in a more understandable format than that provided for by the FTC Earnings Claim Document
Q2) Horizontal territorial restrictions
A)are legal and appropriate agreements for franchisees
B)enhance competition among firms
C)involves competitors selling similar products grouping together and excluding a third part
D)involves a relationship between the franchisor and franchisee
Q3) Family-owned and/or controlled businesses
A)usually continue to exist over two and sometimes three generations
B)usually succeeds ten or more years
C)account for a clear majority of all incorporated firms in the United States
D)generate more than 80% of U.S.GDP
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Chapter 19: The Franchising Relationship
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Sample Questions
Q1) Why is the final stage of the franchisor-franchisee relationship cycle called Decline or Development?
A)the business may decline or continue to grow and prosper,and the relationship will mirror that decline or growth.
B)the relationship will go through both of these stages simultaneously.
C)the relationship will go through both of these phases quickly.
D)independent of the direction in which the business is headed,the relationship will either decline or grow during this phase.
Q2) Which of the following best describes the franchisor-franchisee relationship?
A)steering-power/pedal-power
B)superior/subordinate
C)partnership
D)A or C but not B
Q3) How should a FAC be developed?
A)independently by the franchisor
B)independently by the franchisee
C)by the franchisor in cooperation with all the franchisees and corporate headquarters
D)by the franchisor and franchisees only
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Chapter 20: Franchiser Support Services Stage Seven: Current Issues in Franchising
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Sample Questions
Q1) What period of franchisee training is generally the most intensive?
A)grand opening training
B)pre-opening training
C)continuing training
D)field representative training
Q2) Which of the following is NOT one of the building blocks of customer service?
A)improvise!
B)be willing to change!
C)listen to customers!
D)provide friendly services!
Q3) Why is the training manual important to a franchise?
A)it affords the franchisor protection in case of a dispute or question about training.
B)it helps the franchisee organize the information they need to know in order to function effectively.
C)it offers a franchisee training approach to the franchisor.
D)all of the above.
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22
Chapter 21: Social Responsibility and Business Ethics
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Sample Questions
Q1) Which of the following is NOT an argument for businesses to be socially responsible:
A)to create a positive public image for the business
B)to discourage further government regulations
C)social responsibility is a core business purpose
D)to enhance stock price of the firm in the long run
Q2) Which of the following are factors in identifying and transmitting values to future generations?
A)family
B)laws
C)education
D)all of the above.
Q3) Which of the following illustrates the highest level of social responsibility?
A)safe working conditions for employees
B)support for social and cultural activities
C)fair pricing of their products and services
D)providing employees opportunity for growth and development of skills
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Chapter 22: International Franchising
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Sample Questions
Q1) A product strategy which involves changing the product to meet local conditions and consumer demands is called:
A)product conversion
B)product adaptation
C)straight product utilization
D)product invention
Q2) It is expected that by the year 2010,how many of all U.S.franchisors will have foreign outlets?
A)less than 25 %.
B)between 25 - 40%
C)between 41 - 55%
D)more than 55%
Q3) The most common restrictions levied by a government in international trade are?
A)quotas
B)tariffs
C)embargo
D)exchange controls
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