Business Management Unit 3

This is a parent company that develops a product or business process and sells the rights to it.

• Franchisor
• Distributor
• Retailer

The minimum total initial investment for a lodging franchise was reported to be...

• $500,000

• $1,000,000

• $4,000,000

An example of Product-distribution franchising is...

• Fitness center franchise
• Soft-drink franchise

• Coffee shop franchise

An example of a company that falls under Business-format franchising is...

• Subway
• KFC
• Starbucks

What is an advantage of opening a franchise?

• Access to an established brand and business model.
• Inability to change the product offerings.
• Limited control over business decisions.

A franchisor's quality control regulations help franchises to...

• allow franchises to operate independently
• reduce the need for training and support
• maintain consistency in quality and brand reputation

An established franchise creates efficiency by...

• focusing solely on marketing
• standardizing operations and sharing resources
• eliminating competition through aggressive tactics

Supercuts was established in 1975 as an alternative to...

• traditional barbershops and salons
• mobile grooming services
• high-end spas

McDonald's royalty rate is around...

• 2% to 3%
• 10% or more

• 8% to 9%

How can a franchise agreement cause problems when transferring or terminating a business?

• Franchise agreements simplify the transfer process and have no penalties.
• strict approval requirements and potential penalties.

• Franchise agreements are irrelevant to business transfers and terminations.