Small Business Management Entrepreneurship and Beyond 6th Edition by Timothy S. Hatten - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below 1. A disadvantage of the direct ownership system used by early manufacturers in the 1830s like McCormick and Singer was the lack of direct …
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Small Business Management Entrepreneurship and Beyond 6th Edition by Timothy S. Hatten – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
1. A disadvantage of the direct ownership system used by early manufacturers in the 1830s like McCormick and Singer was the lack of direct control and control over quality levels.
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2. Franchising dominates the Quick Service Restaurant segment of the U.S. economy.
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3. McCormick and Singer were two of the first franchises in America during the 1800s.
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4. Franchised businesses directly produce almost 6 million jobs.
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5. Nearly 50 percent of all U.S. businesses are franchised.
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6. Automobile manufacturers have franchisees.
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7. Making products available to consumers through exclusive dealers in a specific geographic region is the purpose of product-distribution franchising.
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8. Product-distribution franchising is commonly used in fast-food restaurants and lodging establishments, such as hotel and motel chains.
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9. In comparison to business-format franchising, product-distribution franchising is more of a turnkey approach to franchising.
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10. The biggest advantage of franchising for a franchisee is the marketing expertise that is provided.
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11. Some franchisors prefer that their franchisees not have experience in the particular field of the franchise.
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12. Local franchisees share in the advertising costs spent by the franchisors when advertising nationally and/or regionally.
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13. Franchisors seldom provide financial resources for startup and working capital for inventory.
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14. The primary drawback of franchising to the franchisee is that you must give up some control, some decision-making power, and some freedom.
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15. One advantage of franchising to the franchisee is that it is relatively easy to terminate a franchise agreement if things are not going well.
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16. If a franchisee feels that a product, promotion, or policy may not be appropriate for his/her area, the franchisee can decide to not participate.
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17. A right of first denial states that a franchisee must decline continuing a franchise agreement before the franchisor can offer the franchise to someone else.
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18. From the perspective of the franchisor, one of the biggest advantages of offering franchises is the expansion of the business happening much faster than if the franchisor were in business alone.
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19. Franchisors often have several sources of income built into franchise agreements, including franchise fees, operating revenue percentages, and product/supplies revenues.
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20. One way in which franchisors have dealt with the complexity of serving differing customer tastes covering large geographic areas is through company owned franchises.
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21. Social media “…can give, it can also take away” according to “Denny’s Social Media Life” on Page 127 of the text. Denny’s made positive use of Twitter but encountered negative impact from customer use of Facebook.
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22. The American Franchise Association is a trade association that provides information and services about franchising.
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23. When individuals have a general idea of the franchise that they are interested in, they should contact the company and ask for a copy of its disclosure statement.
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24. A good question to ask concerning a potential franchise purchase is whether or not the franchise gives exclusive territory for the length of the agreement.
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25. Because franchisors have lawyers look over the franchise agreement, it is not necessary for a franchisee to pay a lawyer to do the same thing.
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26. A potential franchisee may receive only partial use of trademarks, trade names, logos, and other symbols as detailed in the disclosure statement.
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27. Royalty fees that are paid to the franchisor are usually calculated as a percentage of gross profits.
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28. If an advertising fee is charged to a franchisee, the franchisor is required by law to spend a percentage of the collected fees in the franchisee’s market.
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29. Franchise agreements are currently written in simple enough language that a lawyer need not be contacted before signing a franchise agreement.
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30. Over the past 25 years, the wording within disclosure statements has gradually become more “legalese” and complex.
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31. The issue of exclusive territory is the subject of much controversy in the franchising world.
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32. U.S. companies facing increased domestic competition are turning to foreign markets such as Canada and Mexico for expansion opportunities.
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33. When expanding abroad, franchisors must be sensitive to the demographic, cultural, and legal climates of the host country.
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34. With the passage of the North American Free Trade Agreement (NAFTA), franchise opportunities in South America have become a dominant force in the retailing sector.
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35. The process of gathering and verifying the accuracy of information included in the franchise agreement and all other information provided by the franchisor is called
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36. Through the franchise agreement, the ____ gains the benefit of the parent company’s expertise, experience, management systems, marketing, and financial help.
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37. A contractual license to operate an individually owned business as a part of a larger chain is known as a/an
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38. The parent company that develops a product or business process and sells the rights is known as the
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39. The small business person who purchases the franchise in order to sell the product or service is known as the
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40. Franchises have experienced growth since the 1950s, although they have existed since the
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41. In 2010, which famous franchise business took the top spot on the Entrepreneur Franchise 500 list?
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42. Samuel has decided to buy a small pretzel shop, where he will be expected to pay fees and royalties for exclusive rights to local distribution of pretzels made at the shop. Samuel can best be described as a/an
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43. According to the 2014 Franchise Business Economic Outlook, in total, franchised businesses support jobs that produce GDP of ______ billion.
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44. ____ and ____ were two of the first businesspeople to use exclusive agents, which laid the ground for today’s franchising.
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45. Today, franchising is represented in almost every industry, with more than ____ U.S. businesses being franchises.
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46. Franchised businesses directly produce almost ____ jobs.
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47. Product-distribution franchising involves licensing the use of its
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48. Making products available to consumers in a specific geographic region is the purpose of ____ franchising.
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49. A type of franchise in which the franchisee agrees to purchase the products of the franchisor or use the franchisor’s name is called
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50. Product franchises and business-format franchises are used by all but which of the following groups?
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51. A type of franchise in which the franchisee adopts the franchisor’s entire method of operation is known as
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52. According to the pie-chart figure in the text, which of the following choices accounted for the highest percentage of franchises?
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53. Business-format franchising is commonly used in which of the following?
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54. Tom has opened a Ford dealership, where he purchases vehicles from the Ford Company and has full use of the Ford trade name, brand names, and logos to promote the dealership. Tom has engaged in what type of franchising?
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55. While traveling across country over the summer, Gwen and Audrey stayed in well-known, franchised accommodations rather than opting for independent, unknown motels. This example demonstrates which advantage to franchisees?
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56. An advantage of franchising for the franchisee would be all but which of the following?
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57. The greatest benefit to the franchisee is which of the following?
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58. Providing a source of managerial and technical assistance is an advantage to the franchisee that might not be available to an independent business owner. This is called
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59. Technical assistance available to franchisees could include all but which of the following?
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60. Saving money on inventory needs, equipment, and supplies is an advantage for the franchisee that is called
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61. A McDonald’s hamburger that tastes the same at any location in the world is an example of which of the following benefits to the franchisee?
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62. ____ franchisors will charge a fee and/or a specified percentage of sales revenue.
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63. A problem with the cost of purchasing a franchise is that the franchisee is usually required to raise most of the capital
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64. Which of the following companies has the highest franchise fee?
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65. Because customers view franchises as an entire unit, which of the following can have a negative effect on a franchisee’s business?
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66. From the perspective of the ____, the biggest advantage is the expansion of distribution sources with limited equity investments.
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67. Other franchises under the same franchisor can detrimentally affect a franchise by
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68. A statement in the franchise agreement that states that the franchisee must decline to continue the agreement before the franchisor can offer the franchise to someone else is called a
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69. An advantage to the franchisor is all but which of the following?
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70. From the perspective of the franchisor, the biggest advantage of offering franchises is the
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71. Franchising may be the only viable way for which of the following to expand?
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72. A source of revenue that could be built into the franchise agreement might include all but which of the following?
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73. In comparison with expansion of a corporate chain, expanding via franchise can be accomplished with a/an ____ management structure.
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74. Which of the following can significantly reduce costs for a franchisee and thus increase profit margins?
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75. The biggest disadvantage to the franchisor is which of the following?
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76. Which of the following is a way in which franchisors have adapted products to meet the changing needs of customers?
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77. Franchisors can achieve economies of scale as a result of which of these?
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78. Which of the following is the least likely cause of dispute between franchisees and franchisors?
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79. The major trade association of franchising is the
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80. The International Franchise Association publishes ____ annually, which gives requirements, expectations, and assistance capabilities for each franchise.
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81. All of the following are questions that should be answered to determine whether franchising is the appropriate route to small business ownership except
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82. The American Association of Franchisees and Dealers (AAFD) has developed a ____ as a code of ethical business conduct for franchised businesses.
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83. A priceless source of information about a prospective franchise that cannot be obtained from trade associations or from the franchisor can come from which of the following?
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84. Franchisors are required by the ____ to provide disclosure statements to prospective or actual franchisees.
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85. Information that franchisors are required to provide to potential franchisees is contained in which of the following documents?
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86. Disclosure statements identify and provide information on ____ important items.
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87. Identification of risks, fees, benefits, and restrictions of operating a franchise would be included in the
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88. Alicia is considering opening a popular pizza franchise. Before she makes her final decision, she contacts the company and obtains a document that outlines the risks, fees, benefits, and restrictions of owning the franchise. This document is known as a
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89. A disclosure statement should include a description of the lawsuits in which the franchisor and its officers, directors, and management personnel have been involved, also known as
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90. A complete statement of the basis for any earnings claims made to the franchisee is referred to as
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91. Whether a franchise is required to carry the full line of the franchisor’s products or whether additional product lines can be added would fall under the ____ section of the disclosure statement.
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92. Franchisees have recently alleged that the franchisor has overlapped franchise areas. This is a breach of
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93. In the section of the disclosure statement titled “Information about franchisees,” the franchisor must provide the names and addresses of all franchisees located in which proximity to the prospective franchisee?
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94. The legal contract that binds both parties involved in the franchise is known as the
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95. Some franchise agreements specifically require the franchisee to have a percentage of the total franchise fee from which of the following?
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96. All but which of the following should be thoroughly understood before the franchise agreement is signed?
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97. The one-time payment made to become a franchisee is called a/an
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98. The ongoing payments that franchisees pay to franchisors⎯which is usually a percentage of gross sales⎯is known as a/an
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99. Royalty fees are calculated as a percentage of
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100. Before Walter can officially become a franchisee of an auto repair shop, he must first sign a document that defines the precise, detailed conditions of the legal relationship between the franchisee and the franchisor. This document is referred to as the
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101. Before she could open her franchised hair salon, Lori knew she had to pay a one-time fee of $10,000 to the franchisor. This one-time fee is known as the
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102. Most franchise contracts run
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103. Before signing a franchise agreement, a franchisee should make sure that the franchisor must show ____ to terminate the contract
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104. Which of the following sections in the franchise agreement contains information on rights of first refusal, advertising restrictions, and performance quotas?
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105. Overseas franchising has become a major activity for U.S. companies facing increased
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106. Because it is close in proximity and its markets are similar, ____ is an increasingly attractive market for U.S. franchises.
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107. In ____, federal law does not seek to regulate the relationship between franchisor and franchisee, but the franchisee must receive full information at least 10 days before execution of the franchise agreement.
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| Scenario 5-1. Connie is considering opening a small bakery called Connie’s Cookie Cupboard. She loves to bake cookies. Family and friends have told her she should consider opening a small business using her baking skills. Connie has no business experience and no idea where to start in opening her own business. She also has very few funds available. One day she is glancing through the newspaper and notices an ad for a bakery franchise that would like to open an outlet in the local mall. This franchise provides everything from equipment to packaging to full business services. She decides to look into the opportunity further. |
108. In Scenario 5-1 above, all but which of the following would be a major advantage for Connie in choosing to purchase a franchise as opposed to opening her own business?
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109. In Scenario 5-1 above, which of the following would be the major disadvantage for Connie in purchasing a franchise?
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110. In Scenario 5-1 above, which of the following types of franchises is the bakery franchise?
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111. In Scenario 5-1 above, which of the following advantages from the franchisor would benefit Connie the most?
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112. In Scenario 5-1 above, all but which of the following would be disadvantages for Connie if she chose to use franchising?
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| Scenario 5-2. Connie is considering opening a small bakery called Connie’s Cookie Cupboard. She loves to bake cookies. Family and friends have told her she should consider opening a small business using her baking skills. Connie has no business experience and no idea where to start in opening her own business. She also has very few funds available. One day she is glancing through the newspaper and notices an ad for a bakery franchise that would like to open an outlet in the local mall. This franchise provides everything from equipment to packaging to full business services. She decides to look into the opportunity further.
Connie decides to pursue her franchise opportunity further. The bakery franchise looks promising. Since she has a limited amount of funds, no business experience, and no idea how to start a new business, she is seriously considering purchasing the bakery franchise located in the local mall. She obtains a copy of the document that will legally bind her. |
113. Refer to Scenario 5-2. The document that she is carefully considering is the
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114. In Scenario 5-2 above, as Connie is reading through the agreement, she sees that a percentage of her gross sales will be paid to the franchisor. These are called
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115. In Scenario 5-2 above, Connie is concerned that the bakery franchise not open other outlets within 10 miles of the mall. She is concerned about
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116. In Scenario 5-2 above, after reading through the agreement, everything seems clear to Connie. Is there anyone else she should have read the agreement?
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117. In Scenario 5-2 above, the FTC requires all franchisors to provide which of the following for potential franchise owners?
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118. Describe the two types of franchising systems, explain how they differ, and give an example of each.
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119. List and describe three major advantages of franchising for the franchisee.
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120. List and describe three major disadvantages to the franchisee when considering franchising.
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121. After finding a franchise that a small business owner would consider purchasing, discuss three questions that should be asked.
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122. Explain why overseas franchising has become a major activity for U.S. companies.
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123. List at least three questions that individuals should ask themselves to determine whether franchising is the appropriate route to small business ownership.
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124. When considering a franchise, list at least three questions that should be considered to analyze the market in which the franchise will be operating.
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
