Expected to pay as franchisee of business

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Reference no: EM132224171

1. Which of the following statements about a franchise is correct?

A-A franchise provides a business model, a brand and a proven product to the franchisee.

B-A franchise allows an individual to run a local business owned by a large corporation.

C-A franchise gives individuals the opportunity to experiment with an existing business’s products.

D-There is no risk involved in starting and running a franchise business because of the proven business model

2. What types of fees or payments are you expected to pay as a franchisee of a business?

A-An annual fixed fee to the franchisor to be allowed to remain in business.

B-The royalty fees for the support from the franchiser.

C-A percentage of your profits as a subsidy for future franchisees start-up costs.

D-A percentage of corporate employee costs to support the franchise.

3. A Motel 6 franchisee does not do a good job managing the housekeeping staff and is slow at addressing repairs. Customers check-in to their rooms and are frequently cut or injured on broken fixtures. They often ask to be moved to another room or to check out of the hotel completely. This customer experience reflects poorly on the brand and exposes the company to potential liability. This is an example of:

A-A disadvantage to the franchisee - they are not trained well enough to know how to properly run their business.

B-A disadvantage for the franchisee - the cost associated with these incidents will be a burden only to the franchise owner.

C-A disadvantage for the franchisor - a lack of control over the franchisee resulting in damage to the brand.

D-An advantage for the franchisee - the franchisee can expect that the franchisor will cover any legal fees associated with these incidents.

4. In 2002, Ebay, the online auction site, and PayPal, the online electronic payment service came together. This was a match that seemed to fit well together for both parties. People using Ebay to either sell or buy found PayPal to work splendidly for their Ebay transactions. This is a successful example of:

A-horizontal merger.

B-an acquisition.

C-a partnership.

D-a licensing agreement.

Reference no: EM132224171

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