MKT Channels - Chapter 10 (Franchise Marketing Channel)

What is a franchise?

• A legal agreement between a franchisor and franchisee for distributing products or services

• A system for buying stocks

• A partnership agreement

• A type of loan system

Who is the franchisor?

• The person who buys the franchise

• The person who owns the trademarked product or service

• The person who pays the royalty fees

• The person who receives a salary

Which of the following is NOT a type of franchise?

• Product distribution franchise

• Multi-level marketing franchise

• Business format franchise

• Single-unit franchise

What fee does a franchisee usually pay one time at the beginning of the franchise contract?

• Advertising fee

• Royalty fee

• Franchise fee

• Service fee

Why might a franchisor choose to use a franchise channel?

• To reduce flexibility in operations

• For better control over all outlets

• For capital advantages and reduced distribution costs

• To avoid paying royalties

What is a common downside for franchisees in franchise channels?

• Unlimited independence

• Limited independence

• High starting salary

• Ownership of trademarks

What does the franchisee usually have to pay based on monthly gross income?

• Royalty fee

• Franchise fee

• Legal fee

• Management fee

Which of the following qualities is important for a prospective franchisee?

• Ability to operate with minimal supervision

• High tolerance for risky investments

• Desire for complete independence in operations

• Disinterest in financial resources

When is franchising most appropriate?

• For a company with a weak trademark

• When a company wants rapid growth and has a well-designed business model

• For large corporations like Walmart

• When there is no need for training

What is the main advantage of franchising from the franchisor's point of view?

• High levels of control

• Capital and managerial advantages

• Low-cost training

• Quick financial return