MGT - Quiz 7
Malcolm is about to purchase his first franchise. On average, how much should he expect the total cost to be?
$150,000
Malcolm is about to purchase his first franchise. About how much should he expect to pay the franchisor for the up-front franchise fee?
$25,000
How long does the average franchise contract run?
10.5 years
The average contribution to the franchise's advertising program made by the typical franchisee is:
2 percent of its sales.
If the franchisee turnover rate for a franchise is less than _____ percent, a prospective franchisee can be confident that the franchise is sound and that the franchisor-franchisee relationship is good.
5
Multi-unit franchisees own ____ percent of all franchise outlets.
55
Malcolm is about to purchase his first franchise. The average royalty fee that he should expect to pay the franchisor is:
6.7 percent of weekly gross sales.
Item 19 of the Franchise Disclosure Document addresses any earnings claims that a franchisor makes to prospective franchisees. However, ________ percent of franchisors do not make any earnings claims at all in their FDDs, primarily because of liability concerns about committing earnings estimates to writing.
60 to 70
According to the International Franchise Association, _____ percent of its franchisor members operate in international markets.
61
What percentage of franchisees say that, if given the chance, they would choose to purchase the same franchise again?
72
Since 2009, the funding gap between the capital that franchises need to grow and the amount of capital that lenders actually provide has averaged nearly ______ percent.
9
When it comes to franchisees setting prices for the products and services they sell:
Decisions by the U.S. Supreme Court allow franchisors to set maximum prices that franchisees can charge for the products and services they sell.
Which of the following statements about operating a franchise is true?
Even though franchisees operate their own businesses, they are not completely free to make all decisions independently of the franchisor.
Which document covers 23 pieces of information and that every franchisor is required by law to give to prospective franchisees before any offer or sale of a franchise?
Franchise Disclosure Document
Which of the following is not a characteristic of the typical franchisor-franchisee relationship?
Franchisees, like owners of independent businesses, have the freedom to run their franchises as they choose.
Which type of franchising involves a franchisor licensing a franchisee to sell specific products under the franchisor's brand name and trademark through a selective, limited distribution network?
Product distribution
Which type of franchising involves the franchisor providing the franchisee with a complete business format and system?
Pure (business format)
What is the main reason that prospective franchisees give for considering investing in a franchise?
They want to be their own boss without having to start a business completely from scratch.
Which type of franchising involves a franchisee purchasing the right to use the franchisor's trade name without distributing particular products exclusively under the franchisor's name?
Trade name
The Franchise Registry is:
a program under the U.S. Small Business Administration (SB that is designed to help franchisees who qualify to access financing through the SBA's loan guarantee programs.
Which type of franchise agreement gives a franchisee the exclusive right to open multiple franchise units in a specific territory within a specific time?
area development
When a franchisee purchases a franchise, he or she essentially is buying:
experience
Who pays for a franchise's regional or national advertising program?
franchisees
The ______ form of franchising accounts for nearly 95 percent of all franchised outlets
pure
In the United States, ______ franchisors operate more than _________ outlets.
3,000; 770,000
