Small Business Management Chapter 4 Exam Questions and Answers Latest Update 2024-2025 (Rated
A+)
Franchising - Answers A business relationship in which an entrepreneur can reduce risk and benefit from
the business experience of all members of the franchise system. (Value determined by rights contained
in contract, main benefit: privilege of using a widely recognized product name)
Franchisor - Answers Party in a franchise contract the specifies the methods to be followed and the
terms to be met by the other party. (Lends the trademarks/ trade name and a business system)
Franchisee - Answers An entrepreneur whose power is limited by a contractual relationship with a
franchising organization. (Pays a royalty and initial fee for the right to do business under the franchisor's
name and system.)
Franchise contract - Answers Legal agreement between franchisor and franchisee.
Franchise - Answers The privileges conveyed in a franchise contract.
Product and Trade Name Franchising - Answers A franchise agreement granting the right to use a widely
recognized product or name.
Business Format Franchising - Answers A franchise arrangement whereby the franchisee obtains an
entire marketing and management system geared to entrepreneurs.
Growth Strategies: - Answers Master licensee, multiple-unit ownership, & area developers
Master licensee - Answers An independent firm or individual acting as a middleman or sales agent with
the responsibility of finding new franchisees within a specified territory. (continuing contractual
relationship w/ a franchisor to sell its franchisees)
Multiple-unit ownership - Answers Ownership by a single franchisee of more than one franchise from
the same company.
Area developers - Answers Individuals or firms that obtain the legal right to open several franchised
outlets in a given area.
Market Coverage Variations - Answers Piggyback Franchising, Multi-Brand franchising, Co-branding
Piggyback Franchising - Answers The operation of a retail franchise within the physical facilities of a host
store (Starbucks in Target, Subway in Wal-Mart)
Multi-brand franchising - Answers The operation of several franchise organizations within a single
corporate structure
Co-branding - Answers Bringing two franchise brands together under one roof. (Taco Bell & KFC)
Pros of Franchising - Answers 1. Probability of success
A+)
Franchising - Answers A business relationship in which an entrepreneur can reduce risk and benefit from
the business experience of all members of the franchise system. (Value determined by rights contained
in contract, main benefit: privilege of using a widely recognized product name)
Franchisor - Answers Party in a franchise contract the specifies the methods to be followed and the
terms to be met by the other party. (Lends the trademarks/ trade name and a business system)
Franchisee - Answers An entrepreneur whose power is limited by a contractual relationship with a
franchising organization. (Pays a royalty and initial fee for the right to do business under the franchisor's
name and system.)
Franchise contract - Answers Legal agreement between franchisor and franchisee.
Franchise - Answers The privileges conveyed in a franchise contract.
Product and Trade Name Franchising - Answers A franchise agreement granting the right to use a widely
recognized product or name.
Business Format Franchising - Answers A franchise arrangement whereby the franchisee obtains an
entire marketing and management system geared to entrepreneurs.
Growth Strategies: - Answers Master licensee, multiple-unit ownership, & area developers
Master licensee - Answers An independent firm or individual acting as a middleman or sales agent with
the responsibility of finding new franchisees within a specified territory. (continuing contractual
relationship w/ a franchisor to sell its franchisees)
Multiple-unit ownership - Answers Ownership by a single franchisee of more than one franchise from
the same company.
Area developers - Answers Individuals or firms that obtain the legal right to open several franchised
outlets in a given area.
Market Coverage Variations - Answers Piggyback Franchising, Multi-Brand franchising, Co-branding
Piggyback Franchising - Answers The operation of a retail franchise within the physical facilities of a host
store (Starbucks in Target, Subway in Wal-Mart)
Multi-brand franchising - Answers The operation of several franchise organizations within a single
corporate structure
Co-branding - Answers Bringing two franchise brands together under one roof. (Taco Bell & KFC)
Pros of Franchising - Answers 1. Probability of success
