a. August 1, 2021 by quizs The purchaser of a franchise is called the franchisee. Franchising is limited to only fast foods. In 2003, the two companies introduced The UPS Store® brand. Purchasing a franchise is like any other investment: it comes with risk. False ANSWER: True POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 144 LEARNING OBJECTIVES: FOBU.PRIDE.15.5-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Franchising KEYWORDS: Bloom's: Knowledge 191. Throughout its evolution, it has continued to define and lead the business services category it created. A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand's trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. 1. Copy. The first downside to a franchise is the fact that the franchisee has no control over the business or the way it is run (or has very limited control). Area Franchisee: A franchisee who has acquired exclusive rights to open franchise units within a defined territory, usually . . State laws restrict sales of business opportunities or MLM plan unless the seller gives potential purchasers disclosures before the purchase and/or registers the opportunity with some state agency.If the business is not subject to the disclosure requirements under the Franchise or Business Opportunity Rule, it could be under these 26 states. While we all relate to the McDonald's brand, what most people don't realize is that what made the brand so successful was the "system" which allowed McDonald's to become more efficient, more productive, and more profitable, and, therefore, allowed it to lower its . A franchise is a contract between two parties granting the franchisee (the purchaser of the franchise) certain rights and privileges ranging from name identification to complete monopoly of service. Categories Questions. Small businesses are generally managed by professional managers. Entries for Cash and Lump-Sum Purchases of Property, Plant and Equipment. it is not open to . The demand is lodged with the purchase department in the prescribed Purchase Requisition Form forwarded by the authorised person . For example, government licenses are required to broadcast on specific frequencies and to transport certain materials. D)the holder of a public franchise 4) 5)A public franchise is A)an exclusive right granted to an inventor of a product. If you are considering the purchase of a gas station or about to sign a gas station purchase or franchise agreement, there are a number of legal factors that you must consider and discuss with your business lawyer. The best known franchise broker organizations are The Franchise Network, FranChoiceand The Entrepreneur's Source. Franchises: A franchise is a system in which entrepreneurs purchase the rights to open and run a business from a larger corporation. A franchise is merely a temporary business investment involving renting or leasing an opportunity, not the purchase of a business for the purpose of ownership. A franchise-owned store typically has fewer overheads and fewer costs of operations than a similar chain store. The purchasing procedure comprises the following steps as indicated in Fig. In doing so, the franchisee has purchased the right to use an existing business's. If a franchisee wants to sell their business, the franchisor must approve the new buyer. But beware: If a franchise broker is working with your franchise to help them find new franchisees, they may consider it a conflict of interest to help you sell your franchise location at the same time. The purchaser of a franchise is called the franchisee. Legal issues that arise in different kinds of franchise business in India. 30. One of the advantages of buying a franchise is that the purchaser has access to a proven business system. Identify which generic category fits most franchise systems below International franchising is a strategic way to reduce dependence on domestic demand and grow new, future revenue and profit centers worldwide. Business incubation c. Spinning-off d. Globalization A) Strengths B) Opportunities C) Weaknesses D) Threats 7. Taking a proactive approach, Jaffe contacts the franchise, and after a few months of negotiations, becomes a franchisee. Click to see full answer. When you buy into a franchise, you are buying into a business system. D)an exclusive right granted to a firm to supply a good or service. A small business investment company (SBIC) is a government agency that provides venture capital to small enterprises. 30, 2007).. 2 Id. True. Franchisor authorizes franchisee to sell their products, goods, services and give rights to use their trademark and . A Franchise Agreement, also sometimes called a Business Franchise Agreement, is a document between two main parties, the party that will be franchising out their already well-developed business model, called the franchisor, and the party that will be agreeing to certain terms and conditions in order to create their own franchised business based on that business model. a. the purchase of an engagement ring b. the weekly purchase of a TV Guide c. a one-of-a-kind bird bath for the garden d. a piano stool for the new piano e. the annual vacation cruise ANS: B. But financing hotel purchases has some twists every borrower should understand. Tips for Moving Forward. C. Purchasing a franchise is usually easy and inexpensive for startup business owners. In 2001, UPS® acquired Mail Boxes Etc., Inc. The internal regulations are already in place and form part of the franchise contract. The purchaser of a Franchise is called a Franchisee, and the person who grants the Franchise is called the Franchisor. Buying hotels is in vogue right now. c. Buy a franchise d. Buy an existing business 60. An enterprising owner often expands by purchasing franchise for additional territories or maturing in to a master franchise. The purchaser of a franchise is called the franchisee. Just beware of multi-level marketing and pyramid-type franchises. Small businesses are expected to remain the dominant form of organization in this country. True False The purchaser of a franchise is called the franchisor. Multiple Choice Questions are an important part of exams for Grade 12 Entrepreneurship and if practiced properly can . These resources are necessary for the companies to operate and ultimately make a profit. Jaffe is an example of which trend in franchising? In many instances, both parties are private businesses. Property, plant, and equipment (fixed assets or operating assets) compose more than one-half of total assets in many corporations. The seller asked him to sign a _____ that prohibits Harold from sharing this confidential information with anyone else. Common Franchise Terms. Step-by-step solution Chapter 5, Problem 18TYS is solved. The charter of a corporation is also called its general franchise. True. The approach to computing the cost of equity financing which does not explicitly consider risk is called the: Entrepreneurs looking to finance a franchise transfer typically need to put 20% down, while a new location or start-up business requires 25 - 30% down. The master franchisee typically pays the franchise company a significant initial fee for the rights to develop the territory and then retains most or all the initial fees and royalty fees paid over time by the individual franchisees in the territory. Harold was given the chance to examine the tax returns and financial statements of a business he is considering for purchase. The MCQ Questions for Class 12 Entrepreneurship with answers have been prepared as per the latest syllabus, NCERT books and examination pattern suggested in Standard 12 by CBSE, NCERT and KVS. a. franchise contract b. due diligence document c. franchise disclosure document In the Indian market, franchise business model has already deepened its roots. Thousands of cryptocurrency investors recently raised more than $40 . B)a government issued license required to practice a profession. The franchise agreement is the legal agreement that creates a franchise relationship between a franchisor and a franchisee. Which of these refer to an arrangement by which the owner of a product or service allows others to purchase the right to distribute the product or service with help from the owner? C. relinquish contracts. A new franchise outlet opens once every eight minutes in the United States, where one in ten businesses is now a franchise. For example, a franchise factor of 3 would indicate that the P/E ratio . Tags: . Further, we will learn about the Concept and Characteristics of Business. Frequently, the brand-name recognition and the lower wholesale purchasing costs associated with running a franchise appeal to new business owners. Answer: B. It is absolutely not an overstatement to say that everything that surrounds you is 'business'. The category most franchise systems are in is the one that has focus on product or service qualities or characteristics with prices being a second-level or a lower order concern to the purchaser. To simplify things. Most chain stores, on the flip-side, have larger payrolls. An individual who has no prior business ownership experience as a business founder, inheritor of a business, or a purchaser of a business is called a(n) _____ entrepreneur. 1 72 Fed. Correct Answer: Explore answers and other related questions 10+ million students use Quizplus to study and prepare for their homework, quizzes and exams through 20m+ questions in 300k quizzes. In return, the franchisor maintains the business process and you agree to . CBSE Class 12 Entrepreneurship MCQs with answers available in Pdf for free download. By signing up, you'll get thousands. 190 the purchaser of a franchise is called the 190. Franchise Factor: The measurement of the impact on a company's price-earnings (P/E) ratio per unit growth in new investment. Business incubation c. Spinning-off d. Globalization Franchise fees are on average 6.7% with an additional average marketing fee of 2%. False. Buying an existing franchise is called a transfer, and this is the type of franchise purchase that the SBA likes. are called _____. Franchising b. Which of the following is a characteristic of a product trade-name franchise? Advertising Fund: A collective pool of funds used by the franchisor to market the brand. All franchisors give geographical protection to their franchise holders. Franchising is an arrangement where franchisor (one party) grants or licenses some rights and authorities to franchisee (another party). It is the efficient use of these resources that in . View this answer View a sample solution Step 1 of 5 Step 2 of 5 Step 3 of 5 Step 4 of 5 Step 5 of 5 Back to top Corresponding textbook Foundations of Business | 4th Edition Modes of Business: Modes of business can be referred to as the ways in which an entity can carry out its business operations such as . 15445, 15475 (Mar. This first store, opened in Des Plaines, Illinois on April 15, 1955, was meant to be a model for how all McDonald's franchises would appear and operate, and Kroc hoped it would help attract franchisees. . 5) 6)Public franchises create monopolies by restricting A . n.317. A franchise is a system of distribution in which semi-independent business owners pay ________ and ________ to a parent company in return for the right to become identified with its trademark, to sell its product or services, and often to use its business format and system. Franchise opportunities hand book (US Department of Commerce) defines a master franchise as a contract that allows an entrepreneur to establish multiple outlets within a given territory or geographic area. Extending a brand globally through franchising involves low risk, requires minimal investment, and offers a huge upside potential for scaling capabilities. From your computer screen to the chair you sit on, everything is a chain of business. Diff: 2 Page Ref: 183 AACSB: Analytic Skills 28) Chris Jaffe, the owner of a small independent doughnut shop, is worried that a large doughnut franchise will open an outlet near her location and take away business. The UPS Store® concept was introduced in 1980 as Mail Boxes Etc.® - a convenient alternative to the post office. A) Habitual B) Novice C) Serial D) Portfolio 8. True b. If an entrepreneur obtains a commercial bank loan to finance a new venture, s/he is often required to A. provide collateral. Franchise fees are on average 6.7% with an additional average marketing fee of 2%. The headquarters, seller, and supplier of the service or method of operation of a franchise is called the: A. contractee . Ray Kroc sold the first franchise to himself under the "McDonald's System, Inc.". Which of these refer to an arrangement by which the owner of a product or service allows others to purchase the right to distribute the product or service with help from the owner? Wiki User. A franchise is typically attractive because it offers training, financial assistance, and operating benefits. The purchaser of a government license receives the right to engage in regulated business activities. That master is usually responsible for recruiting the individual franchisees and providing all . The headquarters, seller, and supplier of the service or method of operation of a franchise is called the: contractee; direct seller; franchisee; franchisor . and if the individual habitually buys the magazine, she probably did not do any comparison shopping. The franchisee purchases the right to market and . ∙ 2010-07-24 07:53:08. Hence, it becomes necessary for us to understand the legal implications involving a franchise business. Franchising is a well-known marketing strategy for business expansion.. A contractual agreement takes place between Franchisor and Franchisee. What is the purchaser of a franchise called? For one, the franchisee can act as the manager and take care of costly expenses like serving, cleaning, etc. We have been amidst businesses for as long as we can remember. By 1960, there were over 100 franchises. The purchaser of a franchise is called the franchisor. Franchises employ eight million people (13 percent of the workforce) and account for 17 percent of all sales in the U.S. ($1.3 trillion). Basically, a franchise gives you, as the franchisee, the right to use someone else's business system. The purchaser of a franchise is called the: A. contractor B. sole proprietor C. franchisee D. franchisor E. direct buyer Title: ANSWER: D REFERENCE: Franchising: A Popular Trend LEARNING OUTCOME: 5 70. The industry fundamentals continue to go from good to better, and values are . The purchaser of a franchise is called the franchisee. purchasing procedure. Quiz 8 :Franchising and the Entrepreneur. Advertising Fund: A collective pool of funds used by the franchisor to market the brand. The cost of government licenses is amortizable in the same way as franchise licenses. All franchisors give geographical protection to their franchise holders. The purchaser of a franchise is called the franchisor. A franchise tax is a tax imposed by the state on the right and privilege of conducting business as a corporation for the purposes for which it was created and in the conditions that surround it. Area Franchisee: A franchisee who has acquired exclusive rights to open franchise units within a defined territory, usually . Previous The Republican effort to pass on to the states many federal functions is known as Next Visit the Nestle? Definition: An alternative to starting a business from scratch or buying a business opportunity that involves purchasing an existing business for sale. Reg. As a franchisee, you purchase this right by means of an initial fee. You must also operate your business in accordance with a contract, called a franchise agreement. The franchise agreement is essentially a legal document between the franchisor and you (the franchisee). The purchaser of a franchise is called the franchisee. a. For example, a franchise factor of 3 would indicate that the P/E ratio . Often, a monthly contribution to the ad fund will be paid by the franchisees alongside the other royalties. While starting a business . c. Buy a franchise d. Buy an existing business 60. the purchaser of a franchise is called the franchisee Expert Answer A Franchisee model is more of an outsourced model designed by companies where a particular company gives its brand name to a party called as Franchisee to run their business.A Franchisee can also be termed as a business partner who does business on t … View the full answer The purchaser of a Franchise is called a Franchisee, and the person who grants the Franchise is called the Franchisor. answer choices . A franchise agreement is a legal contract between the business, called the franchisor, and the purchaser of the franchise, called the franchisee. The purchase price may depend on whether the small businessperson is investing in a "turnkey" operation, such as a car dealership, or a less complete franchise. 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