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mana 3325 chapter 81) A franchise is a system of distribution in which semi-independent business owners pay ________ and
________ to a parent company in return for the right to become identified with its trademark, to sell its
product or services, and often to use its business format and system.
A) a percentage of sales; royalties
B) upfront costs; incremental costs
C) royalties; monthly consulting charges
D) fees; royalties - correct answer ✔✔D) fees; royalties
2) Franchises total annual sales represent more than ________ and employ nearly ________ workers in
the Unities Sates in more than 300 industries.
A) $17 billion; 17 million
B) $120 billion; 8.2 million
C) $710 billion; 7.8 million
D) $225 billion; 21 million - correct answer ✔✔C) $710 billion; 7.8 million
3) ________ franchising involves providing the franchisee with a complete business system, with an
established name, the building layout and design, accounting systems, and other elements while
________ franchising allows the franchisee to use the franchisor's trade name without distributing the
products exclusively under the franchisor's name.
A) Product distribution; trade name
B) Trade name; pure
C) Pure; trade name
D) Pure; product distribution - correct answer ✔✔C) Pure; trade name
4) McDonald's is an example of a ________ franchise.
A) conversion forms
B) trade name
, C) product distribution
D) pure - correct answer ✔✔D) pure
10) Benefits of involvement in a franchise experience include ________.
A) management training and support
B) brand name appeal and standardization of goods and services
C) national advertising exposure and financial assistance
D) All of the above - correct answer ✔✔D) All of the above
11) Franchisors generally do which of the following regarding financial assistance to franchisees?
A) Provide direct financing.
B) Assist in finding financing and occasionally provide direct assistance in a specific area.
C) Waive royalty fees for franchisees not making an adequate profit.
D) Franchisors provide no assistance because having or finding financing is a requirement for qualifying
for a franchise. - correct answer ✔✔B) Assist in finding financing and occasionally provide direct
assistance in a specific area.
12) A significant advantage a franchisee has over an independent business is the participation in the
franchisor's ________ largely due to the ________ the franchise offers.
A) centralized buying power; buying insight
B) centralized buying power; brand protection
C) centralized buying power; economies of scale
D) economies of scale; territorial protection - correct answer ✔✔C) centralized buying power; economies
of scale
13) Some franchisors offer ________ to give existing franchisees the right to exclusive distribution of
brand name goods or services within a particular geographic area.
A) territorial protection
B) exclusive rights
C) guaranteed protection
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