Question 1

If an individual buys a troubled business, the first step is to restructure the business.

Accepted Answer

A) True 
 B)False

Question 2

What are the differences between a franchisor and a franchisee?

Accepted Answer

A franchisor is a firm that or...

Question 3

A very important commitment a franchisee demands from a franchisor is to limit the number of ________ within a specific radius of the new franchise.

Accepted Answer

The answer of A very important commitment a franchisee demands...

Question 4

A franchisor typically provides ________ through such things as brochures, signs, logos, advertisements, and sales techniques.

Accepted Answer

The answer of A franchisor typically provides ________ through such...

Question 5

Which of the following is a reason for the popularity of franchising in the business world?

Accepted Answer

A)  A franchisor can offer a standard, well-known product that is produced by a consistent, well-tested process.
B)  The profitability of individual franchises does not have to be shared with the franchisor.
C)  Buying a franchise does not take as much planning and thought as starting a business from scratch.
D)  There are no significant risks involved in buying a franchise as the losses will be compensated by the franchisor.

Question 6

List the four ways that a franchisor makes money.

Accepted Answer

Selling a franchise to a franc...

Question 7

Which of the following should be accomplished by a new owner who purchased an existing business?

Accepted Answer

A)  He or she should make all significant changes in one day so as to alleviate any lingering concerns by the employees.
B)  He or she should devise layoff plans taking enough time so that he or she obtains the goodwill of the employees.
C)  He or she should ensure the former owner comes to the business every day for at least 30 days following the sale.
D)  He or she should wait for at least 6 months before informing customers and suppliers of the sale of the business.

Question 8

Identify an accurate statement about buying an existing business.

Accepted Answer

A)  Buying an existing business does not take as much planning and thought as starting a business from scratch.
B)  An entrepreneur has to discover the sources of cash flow after buying an existing business because there is no established cash flow.
C)  An existing business has the benefit of having an established set of processes.
D)  There is no difference in the risk of buying a franchise compared to starting a business from nothing but an idea.

Question 9

When entering a new industry through the purchase of a franchise, a small business owner should

Accepted Answer

A)  examine the industry.
B)  examine potential competitors.
C)  examine position relative to other new franchises.
D)  all of these.

Question 10

What rights does a franchisee receive in exchange for purchasing a franchise?

Accepted Answer

On purchasing a franchise, a franchisee ...

Question 11

Marketing advice is a qualitative area that is very helpful, independent of who is developing and delivering the research.

Accepted Answer

A) True 
 B)False

Question 12

A franchisor and franchisee relationship is governed by the

Accepted Answer

A)  United Franchise Optimum Contract.
B)  United Franchise Offering Clauses.
C)  United Franchise Offering Circular.
D)  United Franchise Offering Contract.

Question 13

In franchising, an entity or individual that grants another party the right to conduct business according to specified methods and terms is known as a

Accepted Answer

A)  franchisor.
B)  franchisee.
C)  franchise.
D)  licensor.

Question 14

A franchisor pays a fee to obtain a franchise.

Accepted Answer

A) True 
 B)False

Question 15

In franchising, an entity or individual granted the right to conduct business according to specified methods and terms of another party is known as a

Accepted Answer

A)  franchisee.
B)  franchisor.
C)  franchise.
D)  licensee.

Question 16

The success of franchising is dependent on the hard work of the franchisee and the value of the ________.

Accepted Answer

A)  owner
B)  franchisor
C)  lessee
D)  licensee

Question 17

In franchising, the ________ is the firm that originates the idea for a business and develops the operational methods.

Accepted Answer

The answer of In franchising, the ________ is the firm...

Question 18

A potential franchisee has to be ________ before receiving a complete Uniform Franchise Offering Circular.

Accepted Answer

A)  bonded
B)  vetted
C)  researched
D)  interviewed

Question 19

There is a complex issue of organizing the process of change from a former business to a new business.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following rights is NOT a benefit of purchasing a franchise?

Accepted Answer

A)  The right to open a branch of the business in a given area
B)  The right to use the franchisor's name
C)  The right to operate a business within the guidelines of the franchise agreement
D)  All of these

Exam 14: Franchising and Purchasing an Existing Business

If an individual buys a troubled business, the first step is to restructure the business.

Correct AnswerverifiedShow Answer

What rights does a franchisee receive in exchange for purchasing a franchise?

Correct AnswerverifiedOn purchasing a franchise, a franchisee ...View AnswerShow Answer

When entering a new industry through the purchase of a franchise, a small business owner should

Correct AnswerverifiedShow Answer

There is a complex issue of organizing the process of change from a former business to a new business.

Correct AnswerverifiedShow Answer

The success of franchising is dependent on the hard work of the franchisee and the value of the ________.

Correct AnswerverifiedShow Answer

In franchising, an entity or individual granted the right to conduct business according to specified methods and terms of another party is known as a

Correct AnswerverifiedShow Answer

A franchisor pays a fee to obtain a franchise.

Correct AnswerverifiedShow Answer

Marketing advice is a qualitative area that is very helpful, independent of who is developing and delivering the research.

Correct AnswerverifiedShow Answer

A franchisor typically provides ________ through such things as brochures, signs, logos, advertisements, and sales techniques.

Correct AnswerverifiedShow Answer

Which of the following is a reason for the popularity of franchising in the business world?

Correct AnswerverifiedShow Answer

A potential franchisee has to be ________ before receiving a complete Uniform Franchise Offering Circular.

Correct AnswerverifiedShow Answer

What are the differences between a franchisor and a franchisee?

Correct AnswerverifiedA franchisor is a firm that or...View AnswerShow Answer

A franchisor and franchisee relationship is governed by the

Correct AnswerverifiedShow Answer

In franchising, an entity or individual that grants another party the right to conduct business according to specified methods and terms is known as a

Correct AnswerverifiedShow Answer

List the four ways that a franchisor makes money.

Correct AnswerverifiedSelling a franchise to a franc...View AnswerShow Answer

Which of the following rights is NOT a benefit of purchasing a franchise?

Correct AnswerverifiedShow Answer

Identify an accurate statement about buying an existing business.

Correct AnswerverifiedShow Answer

A very important commitment a franchisee demands from a franchisor is to limit the number of ________ within a specific radius of the new franchise.

Correct AnswerverifiedShow Answer

In franchising, the ________ is the firm that originates the idea for a business and develops the operational methods.

Correct AnswerverifiedShow Answer

Which of the following should be accomplished by a new owner who purchased an existing business?

Correct AnswerverifiedShow Answer

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On purchasing a franchise, a franchisee ...
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A franchisor is a firm that or...
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Selling a franchise to a franc...
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