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Worksheets7.1 Review
Total questions: 37
Worksheet time: 38mins
Franchisee does not have the right to use the brand
True
False
Franchise is costly because
High investment cost
Initial franchise fee
franchisee is required to pay advertising fee
All of the above
Which party needs to seek professional legal, accounting and business advice prior entering into the agreement?
The franchisor
The franchisee
What is a royalty fee in franchising?
An advantage of franchising for the franchisor is...
It provides a way of growing your business / brand quickly
You don't have to pay any tax
Franchisees will always do exactly what they are told
You don't have to provide any help or support the franchise.
How does a franchisee benefit from a franchise relationship?
By having complete autonomy over business operations
By receiving support and training from the franchisor
By not having to pay any fees to the franchisor
By creating their own brand from scratch
Which document outlines the terms and conditions of a franchise relationship?
Employment contract
Franchise agreement
Lease agreement
Partnership agreement
What is a franchise disclosure document (FDD)?
A document that outlines the personal financial details of the franchisee
A document that provides information about the franchisor's family history
A detailed overview of the franchisor's business, including financial performance and legal obligations
A marketing tool used to attract potential franchisees
Which of the following is the disadvantage of the franchisor?
May loose local variety and choice
Regular payments to franchisor
looses Independence in running the business
if badly run, the brand will suffer
When buying an existing business, for how many years of past financial operations should you ask the owner to provide?
At least 1 year
At least 2 years
At least 3 years
At least 5 years
What is one significant advantage of buying an existing business?
Proven business model
Higher risk
Need for innovation
Less customer awareness
What is one significant advantage of starting a new business from scratch?
Complete creative control
High initial costs
Uncertain market
Operational challenges
Types of business ownership are:
Sole Proprietor
Partnership
Corporation
All of the above
Paid to the franchise company to support television, magazine or other advertising of the franchise as a whole
franchise fee
advertising fees
corporation royalties
franchise disclosure fee
Which of the following is not an advantage of buying an existing business?
existing customer base
seller can provide training
seller may work out financing agreement
capital is required
A franchise is an inexpensive way to get into business quickly.
True
False
An owner who has full responsibility for all debts and actions of the business is said to have_____________.
liability protection
unlimited liability
equity
limited partnership
Why are the McDonald brothers hesitant about expanding their restaurant?
They don’t trust Ray Kroc
They fear losing quality control
They don’t want to become rich
They already own too many locations
What makes the McDonald brothers’ restaurant unique?
It serves gourmet meals
It delivers food to customers’ homes
It focuses on a “Speedee Service System”
It has an extensive menu
What does Ray Kroc suggest to expand the McDonald's brand?
Franchising the restaurant across the country
Offering delivery service
Selling frozen meals
Partnering with a fast-food competitor
What major change does Ray Kroc implement in the franchise model?
He changes the logo
He removes the McDonald brothers from decision-making
He buys the land for the restaurants instead of the franchisees
He introduces a breakfast menu
How does Ray Kroc eventually gain control of McDonald's?
He buys out the McDonald brothers
He forces them to sign over their business
He steals their business model
He partners with a major investor
What does Ray Kroc promise the McDonald brothers in their buyout deal?
A lifelong salary
A handshake deal for 1% of future profits
Free meals at any McDonald's
Ownership of their original restaurant
Select the best definition from the following for the term: Franchise
A contract between a parent company and a franchisee to use the name and sell the goods or services of the parent company. For example Taco Bell.
A business owned by two or more people.
A business fool's goal is to provide a service rather than to make a profit, such as the American Red Cross.
A company that does business and has business facilities in many countries, such as McDonald's.
the prices
the management
How did they practice the layout and system of McDonald’s before the first opening?
By setting up a prototype in a tennis court
By conducting a market survey
By hiring a consultant
By visiting other fast-food restaurants
How did Ray initially sign up franchisees?
Through personal connections
By advertising in newspapers
By hosting seminars
Through direct mail campaigns
Which of the following is a disadvantage of buying an existing business?
It can be expensive to purchase an existing business.
The existing business might need costly improvements or repairs.
The existing business may be poorly managed or staffed.
All of these are disadvantages of buying an existing business
What asset did Ray Croc put up for collateral with the bank for a loan to invest in the McDonald franchise?
his house
his car
another business
his savings account
