Small Business Management
Exam Answer Key
Course Introduction
Small Business Management explores the principles and practices essential for the successful operation and growth of small enterprises. The course covers key topics including entrepreneurial mindset, business planning, marketing strategies, financial management, human resource issues, legal considerations, and innovations tailored to small-scale operations. Emphasizing real-world application, students examine case studies and engage in practical exercises designed to develop skills in identifying business opportunities, securing funding, managing daily operations, and adapting to the challenges and opportunities unique to small businesses. By the end of the course, students will be equipped to launch, manage, and sustain a small business in a competitive marketplace.
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) A dealer who distributes product from a product line supplied by a franchisor is considered to be engaged in:
A)product- and trade-name franchising
B)business format franchising
C)an independent business venture
D)none of the above
Answer: A
Q2) Probably the earliest example of franchising in the United States is most likely to be:
A)Kentucky Fried Chicken
B)McDonald's
C)Western Auto
D)McCormick Harvesting Machine Company
Answer: D
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Chapter 2: Recognizing Franchising Opportunities
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) All of the following are disadvantages of franchising for the franchisee,except for:
A)service costs imposed by the franchisor
B)franchisor failure to meet support expectations of the franchisee
C)typically operate as a non-unionize business establishment
D)restrictions on freedom of ownership
Answer: C
Q2) A number of major questions should be addressed by a potential franchisor before choosing to expand through franchising.Which one of the following is not a major question at the onset?
A)do I have a prototype store or unit that can be replicated?
B)can my product/service meet the test of distance?
C)should I have right of first-refusal on site selection?
D)what skills will be needed by a franchisee to run my business successfully?
Answer: C
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4
Chapter 3: The Franchisor Business Plan
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) How many phases are included in the Franchise PERT Chart?
A)3
B)4
C)6
D)8 Answer: C
Q2) 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
Q3) What are the four main areas of taxation one must consider when reporting about a franchise's activity?
A)sales taxes,business taxes,property taxes,employee taxes
B)sales taxes,property taxes,employee taxes,franchisor taxes
C)sales taxes,property taxes,employee taxes,franchisee taxes
D)sales taxes,property taxes,franchisor taxes,franchisee taxes
Answer: A
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Chapter 4: Franchisor Management, Organization and Administrative Policy
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10 Flashcards
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Sample Questions
Q1) To be a successful leader,Jim Peterson,franchisor and former President of the IFA,believes it is necessary for four factors to exist for a person to be a successful leader.Which one of the following is not one of the required factors for successful leadership?
A)A sense of a strategic vision
B)Ability to articulate the vision,
C)Ability to develop agenda to accomplish a strategic vision
D)Ability to achieve a good golf score while making sales to prospective franchisees
Q2) According to Jim Peterson,it is important to know how customers honestly perceive the quality of the product or service offered by the franchise system.The product quality is within the perception of the customer and is greatly influenced by the franchise system's server.The attitude of the customer is made up of three key factors.Which one of the options below is not one of these critical customer perception factors?
A)70%--the way the customer is looked at;
B)29%--based on the tone of the server's voice;
C)1%--exactly what the employee (server)says;or D)the server's intent to win an argument.
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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) The product life cycle model is a theoretical construct that helps franchisors understand the industry cycle and the cycle of specific products or services with a franchise system's product line."When sales continue to grow but are increasing at a decreasing rate" is associated with which stage of the product life cycle?
A)introduction
B)growth
C)retention & evaluation
D)decline
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
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Chapter 6: Selling Franchises and Marketing Research
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10 Flashcards
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Sample Questions
Q1) 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
Q2) Which of the following is true about the serious prospective franchisee?
A)he/she is not looking to start the franchise as soon as possible.
B)he/she is very straightforward about his/her interest,availability,and financial resources.
C)he/she is cautious about disclosing his/her intentions.
D)his/her time frame generally increases as his/her interest level increases.
Q3) 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) Why might co-branding be beneficial for a mature market?
A)mature markets provide little opportunity for sales and profit growth through traditional outlets.
B)co-branding represents a new approach that can revitalize mature markets.
C)a new and improved,co-branded unit has the potential to bring in extra cash flow that can result in greater overall new profits for the franchise system.
D)all of these are reasons it could be beneficial.
Q2) What factor generally determines which co-branding method is chosen by a franchisor?
A)expertise
B)personal preference
C)profit potential
D)none of these is a determining factor.
Q3) Approximately what percentage of food franchises are co-branded units?
A)5 %
B)20%
C)50%
D)75%
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9
Chapter 8: Managing the Franchisors Operations Process
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) There is one thing every franchise system knows.If you don't know how you want to be positioned in the marketplace,and don't know the value propositions you uphold,then you will be:
A)ahead of all other competitive franchise systems operating in your market area
B)positioned in the market-place and educated on that position by your competition
C)provided sufficient time to determine these factors for yourself within the first 3-5 years of business
D)grateful for the freedom provided by the franchisor for you to "do your own thing."
Q2) The primary administrative costs of administering a franchise program typically include those of:
A)clarifying and disseminating costs of operation about the prototype unit
B)hiring and training salespeople to recruit or solicit prospective franchisees
C)running background checks on the director of franchising and the initial salespeople hired to sell franchises
D)developing an estimate of the number of franchisees to be recruited and signed in the first year of franchising
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Chapter 9: Location and Site Selection
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) Which of the following sequences of the three-step location model is correct?
A)BPI,DMAs,Individual Site Analysis
B)DMAs,Individual Site Analysis,BPI
C)DMAs,BPI,Individual Site Analysis
D)Individual Site Analysis,DMAs,BPI
Q2) 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.
Q3) 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
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Chapter 10: Accounting and Financial Statements:
Presentation and Uses
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Sample Questions
Q1) 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
Q2) Which of the following types of financial ratios measures the ability of the franchise organization to turn sales into profits?
A)activity
B)market
C)profitability
D)coverage/leverage
Q3) 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
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Chapter 11: Financial Management and Fiscal Planning
Tools and Techniques
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Sample Questions
Q1) "Pro forma" accounting statements as used in business financial planning means:
A)actual accounting of income and expenses
B)actual accounting of assets and liabilities
C)a statement of anticipated costs and revenues or change in assets,liabilities and equity based upon prior (operating)financial performance.
D)none of the above
Q2) To fund a franchise business,most franchisee use:
A)a single source of funding
B)multiple sources of funding
C)already have sufficient liquidity to fund the startup and need no additional funding
D)none of the above
Q3) Which one of the following is Not a common method of borrowing funds in the short-term when considering the rate of interest to be paid:
A)percentage-of-sales method
B)simple
C)add-on
D)discount
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Page 13
Chapter 12: Information Systems in Franchising
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10 Verified Questions
10 Flashcards
Source URL: https://quizplus.com/quiz/26392
Sample Questions
Q1) Where does working knowledge come from?
A)financial reports
B)customers
C)franchisors
D)data analyses
Q2) Which of the following activities at the franchisor's headquarters office should be the center of attention?
A)marketing and advertising to prospective franchisees for franchise development
B)managing people who perform franchise support and franchise development
C)helping and supporting business units
D)dealing with financial issues such as accounting and finances
Q3) 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
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14
Chapter 13: Franchise Legal Documents
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5 Flashcards
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Sample Questions
Q1) Which of the following is NOT true about the Franchise Agreement?
A)most of its components are the subject of specific disclosure under the FTC rule.
B)it is generally a static,unchanging document.
C)it is useful for a broad spectrum of businesses.
D)it has evolved as a result of the way franchising has come to be regulated by state and federal laws.
Q2) 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
Q3) 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
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Chapter
Sample Questions
Q1) Which of the following is a property right provided by the government in an original work of author?ship that is fixed in a tangible form?
A)service mark
B)trade secret
C)copyright
D)trademark
Q2) 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
Q3) Which of the following does the trademark most often represent?
A)the source of a product
B)the name of a product
C)a standard of quality
D)a protectable property right
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Chapter 15: Investigating Franchise Opportunities
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Sample Questions
Q1) Rule 436 is a rule issued by ( )provides franchisors and franchisees with certain legal rights under federal law.
A)Interstate Commerce Commission
B)Department of Commerce
C)Federal Trade Commission
D)U.S.Small Business Administration
Q2) The Disclosure Document in franchising means the same as:
A)Uniform Franchise Offering Circular
B)"Rule 245" of the Sherman Anti-Trust Act
C)the Walsh-Healy Act of 1970
D)the commitment to no "tying" agreements between franchise systems.
Q3) Popular franchise directories,which may be the primary first step in information collection for prospective franchisees include all but one of the following.Which should not be included?
A)the Franchise Handbook
B)the New York Times
C)the Executive Guide to Franchise Opportunities
D)the Franchise Opportunities Guide
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Chapter 16: Financing Your Franchised Business
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10 Verified Questions
10 Flashcards
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Sample Questions
Q1) Most franchisors
A)provide up to 90 % in the financing of new franchisees
B)will not become involved with the financing of new franchisees,although a few may provide a limited amount of help
C)arrange for financing of franchisees through their own financial acceptance corporations
D)provide up to 25 %,but rarely any more,of the financing of new franchisees
Q2) The executive summary part of the financial package
A)details how the business intends to generate its profit through the descriptions of products or services offered by the franchisee
B)explains the business,and sparks the interest of the reader in how the funds will be used
C)enumerates all expenses necessary before the first customer enters the door
D)focuses on the franchising agreement between franchisor and franchisee so the reader understands all contracts,licenses and other legal requirements of the business.
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Chapter 17: Marketing the Franchisee Business
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8 Verified Questions
8 Flashcards
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Sample Questions
Q1) 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
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) Which of the following questions is least important as a major critical issue for a new franchisor?
A)what is the target market for my product/service?
B)how should I price the products in my product line?
C)what guarantees,warranties or services should be provided to the customer?
D)who shall I hire as my secretary?
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19
Chapter 18: Managing the Franchisee Business Stage Six:
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Sample Questions
Q1) Which of the following is one of the four principles of coordination that promote effective work groups?
A)coordination is best accomplished through electronic means such as e-mail,electronic calendars,etc.
B)coordination must address all factors within any phase of any endeavor
C)coordination should occur at most once a week
D)coordination is only necessary in the beginning and at the end of a project
Q2) Which of the following is not typically a franchisee "right" granted in the written franchising agreement?
A)right to transfer or sell the business
B)right to relocate within a designated sales area
C)right to develop and sell new products or services
D)fair and equitable performance standards
Q3) 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
Page 20
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Chapter 19: The Franchising Relationship
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Sample Questions
Q1) 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
Q2) What can a franchisor do to enhance awareness in the franchisor-franchisee relationship?
A)encourage the formation of local or regional clubs for franchisees
B)offer awards or performance incentives to successful franchisees
C)take periodic surveys to monitor franchisees' feelings and concerns
D)all of the above
Q3) 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.
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Page 21
Chapter 20: Franchiser Support Services Stage Seven: Current Issues in Franchising
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Sample Questions
Q1) What is the greatest support for a franchisee?
A)a good training manual
B)lots of start-up capital
C)the opportunity for success
D)frequent contact with field representatives
Q2) 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
Q3) Which of the following is the most compelling reason for someone to seek a franchise opportunity?
A)the chance to be self-employed
B)profitability
C)the opportunity to enjoy growth in the franchise
D)pressure from the franchisor
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Chapter 21: Social Responsibility and Business Ethics
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Sample Questions
Q1) Business ethics
A)only involves moral values
B)only involves establishing behavioral standards
C)ultimately is about decision-making
D)only involves determination of right and wrong
Q2) Franchise Advisory Councils:
A)constitute a crucial step along the patch toward growth and development of a franchise system
B)are legally required for franchise systems in some states
C)are always independently developed by franchisees themselves
D)are used in franchise systems primarily to pressure franchisees to behave ethically
Q3) Which of the following is not an appropriate question to identify ethical factors in a decision-making situation?
A)is the action being considered illegal?
B)have all points of view been considered?
C)what are the short-term and long-term consequences of the decision and action?
D)how will I feel if a story about this action appears on the front page of the local newspaper available to the general public?
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Chapter 22: International Franchising
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10 Flashcards
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Sample Questions
Q1) 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%
Q2) The most common and best way of starting a franchise in a foreign country is through?
A)licensing
B)joint venture
C)direct investment
D)master franchisee
Q3) When developing franchise systems in a developing foreign country the first kind of franchises to develop in that country are:
A)domestic franchises
B)foreign retail franchises
C)domestic hospitality franchises
D)foreign hospitality franchises
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