Small Business Management Ch.8
Alonzo is considering purchasing a fitness franchise and wants to compare the advantages and disadvantages of several franchisors. Which document should he request from the franchisors that he is considering?
Franchise Disclosure Document
The average initial investment for a franchise is:
$520,000
How long does the average franchise contract run?
10.5 years
The charge-off rate for SBA-guaranteed loans to franchisees is _____percent, compared to a charge-off rate of ____ percent for all SBA-guaranteed loans.
13; 18
What percentage of franchisees do not read the franchise contract before they sign it?
18 percent
In addition to requiring franchisees to contribute to a national advertising fund, many franchisors require franchisees to spend a minimum amount on local advertising. The average amount is:
2 percent of sales
The average amount that franchisees are required to contribute to fund the franchisor's national advertising campaign is:
2 percent of sales
Alicia is looking for a career change and is evaluating several sandwich shop franchises. She has received copies of each franchisor's FDD, and one of the statistics she analyzes is each franchisor's franchise turnover rate. A percentage approaching what value should alert her that there could be serious, underlying problems in a franchise?
20
According to a recent survey, ___ percent of existing franchisees rely on SBA loan guarantees to secure financing.
23
What percentage of franchises do minority entrepreneurs own?
31.2
Franchisors are finding many opportunities to generate sales through mobile commerce. What percentage of e-commerce Web traffic originates from mobile devices such as smart phones and tablets?
55 percent
What is the average royalty fee that franchisors collect from their franchisees?
6.7 percent of weekly gross sales.
_______ percent of food and beverage franchisees say that, if given the chance, they would choose to purchase the same franchise again.
74
A recent survey by the International Franchise Association reports that ____ percent of its members believe that taking their franchises into international markets is important to the future success of their businesses.
82
in the United States alone, franchises -------------A.employ more than 7.8 million workers. B.account for 2.3 percent of the U.S. GDP. C.generate more than $710 billion in annual sales. D.operate in more than 300 industries. E.All of these are correct.
All of These are correct
Which type of franchising arrangement combines two or more distinct franchises, such as Jamba Juice and Breugger's Bagels, under one roof for synergistic reasons?
Cobranding
Where does the greatest opportunity for growth for U.S.-based franchisors lie?
International markets
Which form of franchising involves a franchisor licensing a franchisee to sell specific products, such as automobiles, under the franchisor's brand name and trademark through a selective, limited distribution network?
Product distribution
Which form of franchising provides franchisees with a complete business system, including a license for a brand name, the products or services sold, the store layout, the methods of operation, a marketing plan, and other resources?
Pure (business format)
Which of the following statements about the franchisor-franchisee relationship is false?
The franchisor dictates all of the prices that its franchisees charge, and franchisees must comply with that pricing policy or risk losing their franchises.
When considering purchasing a franchise, the most important question an entrepreneur can ask is:
What can a franchise do for me that I cannot do for myself?
When entering international markets, many franchisors create a(n) ____________ agreement, which gives a franchisee in the target country the right to develop subfranchises by recruiting, developing, and supporting other franchisees.
master franchise
What is the average up-front franchise fee that franchisors charge?
$25,000
