Franchising and Business Types Quiz

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Questions and Answers

What is a joint venture franchise?

A franchise that operates independently.

A franchise with no established brand.

A franchise granted to a joint venture party. (correct)

A franchise granted to a single owner.

Which of the following is an advantage for a franchisee?

High operating capital requirements.

Total independence from the franchisor.

Quality Control Standards. (correct)

Complete freedom in business operations.

What is a common disadvantage for franchisees?

Established product or service.

Service costs. (correct)

Technical and managerial assistance.

Opportunities for growth.

What is one of the main advantages of franchising for franchisors?

Expansion opportunities. Signup and view all the answers

Which sector is considered one of the most dynamic segments of franchising?

Restaurants. Signup and view all the answers

What might be a disadvantage for franchisors?

Potential problem of recruitment. Signup and view all the answers

What is a possible reason for a franchisee's overdependence?

Limited access to various suppliers. Signup and view all the answers

Which of the following is not an advantage of franchising for a franchisee?

Independence in decision-making. Signup and view all the answers

Which services are primarily provided by the franchisor in a franchise system?

Selling franchises and providing advertising programs Signup and view all the answers

What is the role of a multiunit franchisee?

An owner of multiple franchised units within a designated area Signup and view all the answers

What is the purpose of a situation audit in strategic planning?

To evaluate organizational objectives and operational capabilities Signup and view all the answers

Which characteristic is NOT associated with smaller businesses regarding strategic planning?

Ability to quickly adapt to market changes Signup and view all the answers

Which factor is commonly cited as increasing operating expenses for smaller businesses?

Government regulations and compliance requirements Signup and view all the answers

What is franchise marketing primarily concerned with?

Marketing strategies to attract new clients Signup and view all the answers

What challenges do smaller businesses face in strategic planning?

Minor changes significantly affecting profitability Signup and view all the answers

Who is typically tasked with creating sophisticated advertising for a franchise?

Franchisors who oversee the brand Signup and view all the answers

What does the franchisor support package typically refer to?

Measures to maintain relationships with franchisees Signup and view all the answers

Which of the following is NOT an element of the management section?

Sales promotions Signup and view all the answers

What is the purpose of a feasibility study in franchising?

To enable informed go or no-go decisions Signup and view all the answers

Which accounting record is essential for assessing cash flow in a franchised operation?

Cash flow statement Signup and view all the answers

Which of the following accurately describes advertising in the context of franchising?

Institutional in orientation, promoting the franchise itself Signup and view all the answers

What type of document is the Uniform Franchise Offering Circular (UFOC)?

A disclosure document mandated by the Federal Trade Commission Signup and view all the answers

Which of the following is NOT listed as a major accounting record for franchisors and franchisees?

Market analysis Signup and view all the answers

Which section typically addresses advertising and promotional support prior to a grand opening?

Franchisor support package Signup and view all the answers

What is the primary responsibility of the owner-manager within the management process?

Planning the franchise's overall goal Signup and view all the answers

Which activity is associated with the Directing function in a franchise organization?

Motivating employees for better performance Signup and view all the answers

What does Organizing entail in the context of franchise management?

Coordinating necessary resources Signup and view all the answers

In the management process, which function involves appraising performance with standards?

Controlling Signup and view all the answers

Which of the following is a characteristic of a Franchise Broker?

Works independently and with multiple franchisors Signup and view all the answers

Which activity does NOT belong to the Directing function?

Formulating business plans Signup and view all the answers

In terms of planning, what is a key concern for franchise management?

Determining the mission and objectives Signup and view all the answers

Which of the following best describes the concept of Multiunit Franchising?

Having rights to develop multiple franchise units Signup and view all the answers

What are convenience goods primarily characterized by?

Low to competitively priced and frequently purchased Signup and view all the answers

Which type of goods are purchased less frequently and are often compared for the best bargain?

Homogeneous shopping goods Signup and view all the answers

What differentiates heterogeneous shopping goods from other types of goods?

Consumers perceive them as markedly different in quality Signup and view all the answers

What defines a specialty product?

Products with unique characteristics sought by consumers Signup and view all the answers

How are convenience services typically characterized?

Emergency or impulse buys Signup and view all the answers

Which group of goods includes items like wedding gowns or custom catering?

Specialty products Signup and view all the answers

What encourages larger sales when marketed together?

Product/service mix Signup and view all the answers

What is typically the focus when describing target markets?

Unique characteristics of consumer preferences Signup and view all the answers

Study Notes

Franchising

Joint venture franchise is a franchise granted to a joint venture party.
Top 20 Global Franchises 2023 includes KFC, Jollibee Foods Corp (JFC), McDonald’s, and A Gasoline/Petrol Stations.
Top 10 Best Franchise in the Philippines 2022-23 includes Jollibee Foods Corp (JFC) and McDonald’s.

Franchise Business Types

Restaurant industry is one of the most dynamic segments
Hotels, Motels and Campgrounds include Quality Inns, Holiday Inns, and Marriott Hotels
Recreation, Entertainment and Travel groups include travel agencies, miniature golf courses, movie theaters, and dance studios.
Automotive Products and Services include franchises specializing in muffler replacements, lube jobs, oil changes, and transmission repair.
Business Aids and Services include accounting and financial planning firms, businesses and services, consulting and brokerages, education and training, gifts, and fund-raising specialists.
Printing, Copying, and Sign Products and Services have the highest ratio of franchisors who make earning claims.
Employment and Personnel Services have the highest ratio of franchisors that require the franchisee to be an owner-operator.

Franchising Advantages

Established Product or Service
Technical and Managerial Assistance
Quality Control Standards
Less Operating Capital
Opportunities for Growth

Franchising Disadvantages

Failed Expectations
Service Costs
Overdependence
Restrictions of Freedom of Ownership
Termination of Agreement

Franchising Advantages for Franchisor

Expansion
Motivation
Operation of Nonunion Business
Bulk Purchasing
Cooperative advertising

Franchising Disadvantages for Franchisor

Company-Owned versus Franchised Units
Potential problem of Recruitment
Potential problem of Communication
Loss of Freedom

Franchisee Management

Multiunit Franchisee is someone who owns or operates more than one franchised unit.
Situation Audit is used to determine a firm's current operating situation by analyzing internal and external factors.
Franchise Marketing is the process of attracting new clients or customers to increase awareness and drive revenue.
Franchisee Training includes understanding reporting requirements, financial analysis approaches, and advertising and promotional support.
Franchisor Support Package refers to measures that help maintain relationships between franchisors and franchisees.
Training Manuals need to be prepared not only for franchisees but also for future employees within the franchised unit.
Feasibility Study should contain enough information for franchisors and franchisees to make a "go or no-go" decision.
Sales Promotion involves specific time-related efforts to improve sales of a particular product, line of products, or services.
Advertising often promotes the overall franchise rather than offering specific products at promotional prices.
Uniform Franchise Offering Circular (UFOC) is a disclosure document outlining business activities, required by the Federal Trade Commission (FTC) from all franchisors.

Franchising Management Process

Planning involves determining the overall goal, mission, and objectives of the franchise and formulating policies and procedures.
Organizing involves the coordination of human, financial, and physical resources.
Directing involves achieving franchise goals through a conducive work environment.
Controlling involves setting performance standards, appraising performance, and providing rewards or corrective action.

Key Activities Associated with Directing:

Giving Directives through written or oral forms
Supervising personnel with training and discipline
Leading involves influencing others to provide effort and cooperation.
Motivating involves understanding people and fostering a cooperative working environment.

Franchise Management Operations

Financial records are valuable tools for making effective management decisions. These include:
- Start-up or turnkey costs
- Financial position for starting franchisor's system
- Balance sheet
- Income statement
- Cash flow statement
- Breakeven analysis
- Ratio analysis
Legal requirements of franchised operation, which include:
- Business Structure
- Licenses, contracts, and permits
- Types and anticipated costs of insurance
- Management Process

Franchise Market Players

Franchise Broker is an independent third party who solicits prospective franchisees for franchisors.

Franchise Marketing Strategies

Target Markets involve clear descriptions of targeted market segments or customers, taking into account consumer preferences and spending patterns.
Product/Service Mix refers to a range of products that are sold in combination to yield greater sales than in each individual product.

Product/Service Stages (Lifecycle)

Stage 1: Introduction sees the product or service entering the market.
Stage 2: Growth sees rapid sales increase as the product or service gains popularity.
Stage 3: Maturity sees the sales rate slowing and stabilizing, but remaining at a reasonably high level.
Stage 4: Decline sees sales volume drop as demand shifts to other products.

Key Terms

Business Image refers to the image the franchise system projects to the public.
Convenience goods or services: frequently purchased goods that are typically low-to-competitively priced and often staples, emergency or impulse buys.
Heterogeneous shopping goods or services: goods perceived by consumers as markedly different in quality and attributes, where price is less important.
Homogenous shopping goods or services: goods purchased less frequently than convenience goods, that are considered highly similar, if not the same, in terms of quality.

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Description

Test your knowledge on franchising, including joint ventures and the top global franchises in 2023. Explore various franchise business types such as restaurants, hotels, and automotive services. This quiz will help you understand the dynamic world of franchising in a fun and engaging way.