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Exam 6: Franchising and the Entrepreneur

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Question 21

Multiple Choice

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In addition to reading the franchiser's FDD,it would be wise for the potential franchisee to seek a franchise that offers which of the following?

A) A unique concept or marketing approach
B) A registered trademark
C) A positive relationship with franchisees
D) All of the above

E) A) and C)
F) B) and C)

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Question 22

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A good method for evaluating a franchiser's reputation is to interview existing franchise owners about the operation.

A) True
B) False

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Question 23

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One of the major trends in franchising is the ________ of American franchise systems.

________ 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 franchiser's trade name without distributing the products exclusively under the franchiser's name.

A major advantage of a franchise contract is the national advertising campaign that most franchisers provide free of charge for their franchisees.

What are some indicators that a potential franchisee might be dealing with a dishonest franchise? What steps can a potential franchisee take to avoid becoming a victim of a dishonest franchise?

Pure franchising involves a system of franchising in which a franchisor sells a franchisee a complete business format and system.

Absentee franchise owners are consistently successful.

Quality is so important in franchising that most franchisers retain the right to terminate the franchise contract and to repurchase the outlet if a franchisee fails to maintain quality standards.

When it comes to purchasing products,equipment,and incurring other expenses,the franchiser:

The franchise contract defines the rights and the obligations of both parties and sets the guidelines that govern the franchise relationship.

What is the Franchise Disclosure Document? How can this document be of value to a potential franchisee?

Most franchisers provide extensive financial help such as loans and low-rate financing for their franchises.

Having an attorney review and evaluate a franchise contract is unnecessary since the FTC requires all franchisers to offer a "standard" franchise contract.

Outline the recommended procedure for buying a franchise.

The franchisee turnover rate is the rate at which franchisees leave a franchise system.

Which of the following is not a potential disadvantage of a franchise?

Benefits of involvement in a franchise experience include:

Establishing a Baskin-Robbins franchise inside a Blimpee's franchise is an example of ________ franchising.

Pure franchising involves the right to use all the elements of a fully integrated business operation.