Franchising Overview Quiz

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Questions and Answers

What is a disadvantage of internal recruitment?

Fosters new ideas and perspectives

May cause jealousy among workers (correct)

Saves costs associated with advertising

Generally quicker hiring process

Which of the following is an advantage of external recruitment?

Brings in new ideas to the business (correct)

Reduces the time taken to fill a vacancy

Cost-effective compared to internal recruitment

No need for advertising methods

What does a contract of employment include?

Job satisfaction metrics

Name of the employer and employee (correct)

Future salary increases

Workplace culture descriptions

Which of the following is a disadvantage of part-time employment?

Difficult communication when unavailable Signup and view all the answers

What is the primary purpose of training in a business?

To improve workers' skills and knowledge Signup and view all the answers

What is a disadvantage of full-time employment?

Less flexible working hours Signup and view all the answers

What is a key characteristic of a franchise agreement?

The franchisor allows the franchisee to use their business idea. Signup and view all the answers

What is one disadvantage for franchisees in a franchising system?

They must pay a license fee to the franchisor. Signup and view all the answers

Which type of training helps new employees to adjust quickly to their job?

Induction training Signup and view all the answers

What legal documentation outlines the rights and responsibilities of employees?

Contract of employment Signup and view all the answers

What advantage does a franchise offer to the franchisor?

Franchisees help in expanding the brand at a lower cost. Signup and view all the answers

Which of the following is a disadvantage of a joint venture?

Cultural differences may hinder decision-making. Signup and view all the answers

What is one aim of public sector corporations?

To keep prices low for public accessibility. Signup and view all the answers

How is risk managed in a joint venture?

By sharing the risks and costs among the partners. Signup and view all the answers

Which statement best describes a disadvantage for franchisors?

They may face challenges in quality control. Signup and view all the answers

What is a potential issue that can arise if a franchise fails?

The whole brand's reputation may be damaged. Signup and view all the answers

Which of the following factors affects promotional decisions?

Cost-effectiveness Signup and view all the answers

What is one key advantage of e-commerce?

Selling products to a large customer base Signup and view all the answers

Which strategy can help overcome problems of entering foreign markets?

Joint ventures Signup and view all the answers

What does productivity measure in a business?

Efficiency of output against input Signup and view all the answers

Which sales promotion technique is known as BOGOF?

Buy One Get One Free Signup and view all the answers

What can businesses do to improve productivity?

Introduce automation Signup and view all the answers

What is a disadvantage of e-commerce?

Increased competition Signup and view all the answers

What is the main purpose of legal controls on marketing?

To protect consumers and ensure fair practices Signup and view all the answers

Which type of communication involves a response from the receiver?

Two-way communication Signup and view all the answers

What is a primary disadvantage of verbal communication?

Discussions can waste time. Signup and view all the answers

What is an advantage of using written communication?

It provides evidence for future reference. Signup and view all the answers

Which factor should be considered if the information needs to be conveyed quickly?

Speed Signup and view all the answers

What defines downward communication in an organization?

Messages from managers to subordinates. Signup and view all the answers

Which statement about visual communication is true?

It can effectively reinforce written materials. Signup and view all the answers

When is it most appropriate to use informal communication methods?

When colleagues are on the same organizational level. Signup and view all the answers

Which of the following is a disadvantage of using written communication?

It may be difficult to understand. Signup and view all the answers

What is a crucial factor influencing the location decisions for service-based businesses?

Availability of skilled labor Signup and view all the answers

Which factor is important for retail location decisions?

Frequency of shoppers in the area Signup and view all the answers

Why might a business choose to relocate to another country?

To take advantage of lower rent or taxes Signup and view all the answers

What does start-up capital primarily refer to?

Initial investment needed for business setup Signup and view all the answers

Which type of finance is considered as internal source?

Retained profit Signup and view all the answers

What is a disadvantage of using retained profit as a source of finance?

Profit may be too low for significant investments Signup and view all the answers

What effect do planning restrictions have on business location decisions?

They discourage firms from establishing themselves in crowded or scenic areas Signup and view all the answers

What is the primary purpose of working capital in a business?

To manage everyday operational expenses Signup and view all the answers

Study Notes

Franchising

A franchisor grants a license to a franchisee to use their business idea, brand logo, and image.
Advantages for the Franchisor:
- Low cost of business expansion
- Franchisees have better understanding of local tastes
- Profits are shared with the franchisee
- Franchisor supplies raw materials and training
Disadvantages for the Franchisor:
- If one franchise fails, the entire brand's reputation is affected
- Franchisor has to pay for raw materials and training
- No full control over the franchise
Advantages for the Franchisee:
- Management is responsible to the franchisee
- If the franchisor is well-known, chances of failing are low
- Low start-up cost
Disadvantages for the Franchisee:
- Need to share profits with the franchisor
- Must follow franchisor standards and rules
- Start-up cost is not fully covered
- Need to pay a license fee to continue running the franchise

Joint Ventures

An agreement between two or more businesses working together on a project.
Advantages:
- Risks and costs are shared
- One business's market and product knowledge is leveraged
- Market potential is increased
Disadvantages:
- Different cultures and leadership styles may affect decision-making
- Mistakes could damage the reputations of all businesses involved

Public Sector Corporations

Businesses owned by the government and run by appointed directors
Provide essential services such as water and electricity
Aims:
- Keep prices low
- Provide job opportunities
- Offer a service to the public

Recruitment

Internal Recruitment: Filling a vacancy with an existing employee
- Advantages:
  - Saves time and money
  - Motivates existing employees
  - Existing employee is already familiar with the business
- Disadvantages:
  - No new skills are introduced
  - May cause jealousy among other employees
External Recruitment: Filling a vacancy with someone new to the business
- Advantages:
  - New skilled person can motivate existing employees
  - Introduces new ideas
- Disadvantages:
  - Costs time and money
  - New employee needs to adapt to the business

Contract of Employment

Legal agreement between employer and employee outlining their rights and responsibilities.
Includes:
- Names of employer and employee
- Job title
- Payment details
- Working hours

Employment Types

Part-Time: 1 to 30-35 hours per week
- Advantages:
  - Flexible hours
  - Less expensive for employers
  - Can ask to work during busy times
- Disadvantages:
  - Difficult communication when unavailable
  - Less likely to be promoted
  - Less likely to be trained
Full-Time: 35 hours or more per week
- Advantages:
  - More promotion opportunities
  - Easier communication
  - Training for effective productivity
- Disadvantages:
  - Expensive to recruit
  - Less flexibility

Training

Improves employee skills and knowledge, increasing business efficiency and productivity
Induction Training: Introduction to a new employee covering the company's activities, customs, and procedures
- Advantages:
  - Helps new employees settle in quickly
  - Less likely to make mistakes
- Disadvantages:
  - Time-consuming
  - Wages are paid while no work is being done
  - Delays start time for new employees

Communication

One-way Communication: Message without feedback
Two-way Communication: Message with feedback
Downward Communication: Messages from managers to subordinates
Upward Communication: Messages/feedback from subordinates to managers
Horizontal Communication: Messages between people at the same level in an organization

Communication Methods

Verbal Communication: Telephone conversations, face-to-face discussions, video meetings
- Advantages:
  - Quick & efficient
  - Immediate feedback
  - Speaker can influence listeners through body language
- Disadvantages:
  - Discussions can waste time
  - Not guaranteed that everyone understands the message
  - No written record
Written Communication: Letters, memos, text messages
- Advantages:
  - Evidence for future reference
  - Detailed information
  - Can be sent to many people
- Disadvantages:
  - Direct feedback may not be possible
  - Language may be difficult to understand
  - Can't ensure message has been received and acknowledged
Visual Communication: Diagrams, charts, videos
- Advantages:
  - Appealing and attractive
  - Can be used with written materials
- Disadvantages:
  - No feedback
  - May not be understood properly

Factors Affecting Communication Method Choice

Speed: Urgent information needs a faster method like a phone call.
Cost: Letters are used for cost reduction, while posters are more expensive.
Importance of Written Record: Detailed information like receipts needs a written method.
Importance of Feedback: Verbal or written methods are best for feedback needing.

Sales Promotion

Techniques used to increase sales
Promotion methods:
- BOGOF (Buy One Get One Free)
- After-sales service
- Competitions
- Point-of-sale displays
- Free samples
Factors affecting promotion decisions:
- Stage of product on the product life cycle
- Nature of the product
- Nature of the target market
- Cost-effectiveness

E-Commerce

Using the internet for selling and marketing goods online
Includes online shopping, online banking
Advantages:
- Cheaper in the long-run
- Access to a larger customer base
- Globalization for more profit
Disadvantages:
- Increased competition
- No personal communication
- Online security issues

Marketing Strategy

A plan that combines the marketing mix (product, price, place, promotion) to achieve marketing objectives and profits.

Legal Control on Marketing

Aims to:
- Protect consumers from faulty and dangerous goods
- Protect consumers from exploitation and monopolies
- Prevent businesses from using misleading advertising information

Business Globalization

Reasons:
- Increase sales, revenue, and profits
- Increase potential customer base
- Access to cheaper raw materials
- Cheaper export costs
Problems:
- Differences in language and culture
- Lack of market knowledge
- Economic differences
- High transport costs
Solution: Joint ventures

Production

Effective management of resources in producing goods and services
Combines the factors of production
Operation Department overlooks the production process, ensuring:
- Cost-effective resource usage
- Effective inventory management
- Producing required output to meet customer demands
- Meeting customer quality standards

Productivity

Measure of business efficiency
Output measured against input
Improving productivity:
- Improving employee skills through training
- Introducing automation
- Improving employee motivation

Buffer Inventory Level

Level of inventory held by the business in case of high demand

Factors Affecting Location Decisions for Manufacturing Business

Availability of Raw Materials: Proximity to raw material sources for cost-effectiveness
Proximity to Markets: Accessibility to important markets for timely delivery
Availability of Labor: Access to skilled workers
Transport Links: Efficient transportation network for delivering goods and materials
Land and Building Costs: Affordable land and buildings for efficient operations
Government Incentives: Grants or subsidies provided by the government
Environmental Factors: Suitable environment for operations, such as pollution controls

Factors Affecting Location Decisions for Service Business

Customers: Direct contact with customers and easy accessibility
Availability of Labor: Access to specific types of workers
Climate: Suitable climate for tourism services

Factors Affecting Location Decisions for Retail

Shoppers: Location near frequent shopper areas
Parking Availability: Sufficient parking to attract customers
Security: Low crime rates and good security

Reasons for Business Relocation

Lower rent and taxes
Access to cheaper raw materials
Avoiding trade barriers and tariffs when exporting

Government Influence on Location Decisions

Encourage businesses: Grants and subsidies in underdeveloped or high unemployment areas
Discourage businesses: Planning restrictions in crowded or environmentally sensitive areas

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Description

Test your knowledge about franchising concepts including its advantages and disadvantages for both franchisors and franchisees. This quiz will help you understand the critical aspects of running a franchise and its operational dynamics. Perfect for students and business enthusiasts alike!