Q&A Hero

Q: Identify the three productivity variables used in the text.

Q: The legal document between a franchisor and a franchisee

Q: A rule that prescribes that the franchisor must disclose certain information to prospective franchisees

Q: Productivity is the ratio of ________ to ________. Using this relationship, productivity can be improved by ________ or ________.

Q: ________ is the total of all outputs produced by the transformation process divided by the total of the inputs.

Q: The party in a franchise contract that specifies the methods to be followed and the terms to be met by the other party

Q: A detailed statement that provides the accepted format for satisfying the franchise disclosure requirements of the FTC

Q: Starbucks stopped requiring signatures on credit-card purchases under $25 in an attempt to reduce ________.

Q: A cleaning company uses $10 of chemicals, $40 of labor, and $5 of misc. expenses for each house it cleans. After some quality complaints, the company has decided to increase its use of chemicals by 50%. By what percentage has multifactor productivity fallen? A) 0% B) 8.3% C) 25% D) 50% E) 16.7%

Q: One possible disadvantage of becoming a franchisor is: a. complying with all the government regulations. b. the cost of franchising exceeds the franchise fee. c. the cost of screening prospective franchisees. d. providing training to new franchisees. a. due diligence b. fair market value c. franchise d. franchise contract e. Franchise Disclosure Document f. Franchise Rule g. franchisee h. franchisor

Q: If a franchisor is guilty of encroachment of a franchisee, which agreement is it most likely to be in violation of?​ a. ​Nondisclosure agreement b. ​Franchise Rule c. ​Franchise Disclosure Document d. ​Noncompete agreement

Q: A cleaning company uses 10 lbs each of chemicals A, B and C for each house it cleans. After some quality complaints, the company has decided to increase its use of chemical A by an additional 10 lbs for each house. By what % has productivity (houses per pound of chemical) fallen? A) 0% B) 10% C) 15% D) 25% E) 33%

Q: Edmond is negotiating to purchase an existing business. One provision he should write into the sale contract is: a. access to the sellers customer list. b. disclosure of the businesss revenues for the last year. c. a statement of the royalties payable to the seller. d. a non-compete agreement.

Q: A small metal shop operates 10 hours each day, producing 100 parts/hour. If productivity were increased 20%, how many hours would the plant have to work to produce 1000 parts? A) less than 2 hours B) between 9 and 10 hours C) between 2 and 6 hours D) between 6 and 8 hours E) between 8 and 9 hours

Q: Union contracts are among the many _____ factors in valuing a business. a. nominative b. nonessential c. nonquantitative d. nonqualitative

Q: Productivity tends to be more difficult to improve in the service sector because the work is: A) often difficult to automate. B) typically labor-intensive. C) frequently processed individually. D) often an intellectual task performed by professionals. E) All of the above make service productivity more difficult.

Q: The service sector has lower productivity improvements than the manufacturing sector because: A) the service sector uses less skilled labor than manufacturing. B) the quality of output is lower in services than manufacturing. C) services usually are labor-intensive. D) service sector productivity is hard to measure. E) the service sector is often easy to mechanize and automate.

Q: Bart is meeting with a representative of GHI, a franchisor. He has received information about the franchisors finances, experience, size, and involvement in litigation. Bart has been given: a. a master license. b. a non-disclosure statement. c. a franchise rule. d. a franchise disclosure document.

Q: Three commonly used productivity variables are: A) quality, external elements, and precise units of measure. B) labor, capital, and management. C) technology, raw materials, and labor. D) education, diet, and social overhead. E) quality, efficiency, and low cost.

Q: Geraldo owns a well-known brand and allows Henry to sell products with that brand name. Geraldo has agreed to: a. product and trade name franchising. b. business format franchising. c. master licensing. d. co-branding

Q: Which of the following is NOT true when explaining why productivity tends to be lower in the service sector than in the manufacturing sector? A) Services are typically labor-intensive. B) Services are often difficult to evaluate for quality. C) Services are often an intellectual task performed by professionals. D) Services are difficult to automate. E) Service operations are typically capital intensive.

Q: JKL Corporation grants another party the right to conduct business according to specified methods and terms. JKL is a: a. franchisor. b. franchisee. c. franchise. d. licenser.

Q: The factor responsible for the largest portion of productivity increase in the United States is: A) labor. B) management. C) capital. D) All three combined; it is impossible to determine the contribution of individual factors. E) none of these.

Q: The franchising strategy whereby an individual or firm is granted the legal right to own more than one unit of a franchised business is known as a. multi-brand franchising. b. multiple-unit ownership. c. piggyback franchising. d. aggregate ownership.

Q: The Franchise Registry maintained by the U.S. Small Business Administration a. lists warnings about certain franchise systems. b. speeds up loan processing for small business franchisees. c. rates franchise systems according to a four star rating. d. registers all franchise systems operating in the U.S.

Q: The largest contributor to productivity increases is ________, estimated to be responsible for ________ of the annual increase. A) management; over one-half B) Mr. Deming; one-half C) labor; two-thirds D) capital; 90% E) technology; over one-half

Q: Productivity can be improved by: A) increasing inputs while holding outputs steady. B) decreasing outputs while holding inputs steady. C) increasing inputs and outputs in the same proportion. D) decreasing inputs while holding outputs steady. E) none of the above.

Q: Caron signed a contract with Devon allowing her to provide services using Devons trademark, logo, and business model. This business is: a. a franchise. b. a franchisor. c. a franchisee. d. an independent business.

Q: Which of the following nets the largest productivity improvement? A) increase output 15% B) decrease input 15% C) increase both output and input by 5% D) increase output 10%, decrease input 3% E) decrease input 10%, increase output 3%

Q: The agreement Irma signed with McDonalds that allows her to open a restaurant using the McDonalds name is: a. a master license. b. an area development plan. c. a lend-lease agreement d. a franchise contract.

Q: Stuart is interested in opening a QRS franchise. QRS requires up-front payment of $150,000. This amount represents: a. Stuarts investment costs. b. the initial franchise fee. c. royalty payments. d. marketing fees.

Q: Which productivity variable has the greatest potential to increase productivity? A) labor B) globalization C) management D) capital E) energy

Q: The total of all outputs produced by the transformation process divided by the total of the inputs is: A) utilization. B) greater in manufacturing than in services. C) defined only for manufacturing firms. D) multifactor productivity. E) single-factor productivity.

Q: Which source of franchise information is produced by a federal agency? a. Buying a Franchise: A Consumer Guide b. Website of Entrepreneur magazine c. Francorp d. Franchise list for the International Franchise Association

Q: Productivity measurement is complicated by: A) the competition's output. B) the fact that precise units of measure are often unavailable. C) stable quality. D) the workforce size. E) the type of equipment used.

Q: Jasper is evaluating a business for possible purchase. He needs to know what a fair offering price should be. One way to do this would be: a. to ask a business broker for his appraisal. b. to search the Internet for information about this business. c. to appraise the value of the assets of this business. d. to base his offer on the owners equity on the balance sheet.

Q: The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. Due to higher demand, they have decided to operate three 8-hour shifts instead. They are now able to produce 600 boxes per day. What has happened to productivity? A) It has not changed. B) It has increased by 37.5 boxes/hr. C) It has increased by 20%. D) It has decreased by 8.3%. E) It has decreased by 9.1%.

Q: Nardells franchise contract contains language that prohibits him from opening a similar business under his own brand. Nardell considers this to be: a. due diligence. b. restraint of trade. c. restrictive practice. d. encroachment.

Q: The Dulac Box plant works two 8-hour shifts each day. In the past, 500 cypress packing boxes were produced by the end of each day. The use of new technology has enabled them to increase productivity by 30%. Productivity is now approximately: A) 32.5 boxes/hr. B) 40.6 boxes/hr. C) 62.5 boxes/hr. D) 81.25 boxes/hr. E) 300 boxes/hr.

Q: Susan is considering buying the local franchisee of Pots-R-Us. The owners would probably state this reason for selling when in actuality the other three reasons may be more likely. a. desire to locate to a different part of the country b. unprofitable c. loss of an exclusive sales franchise d. lack of growth potential

Q: The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. What is the productivity of the plant? A) 25 boxes/hr. B) 50 boxes/hr. C) 5000 boxes/hr. D) 0.04 boxes/hr. E) 250 boxes/hr.

Q: Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves per shift. If the production is increased to 2000 valves per shift, labor productivity will increase by: A) 10%. B) 20%. C) 25%. D) 40%. E) 50%.

Q: Which of the following reasons for buying a business is also a reason for purchasing a franchise? a. Reduction of uncertainty b. Acquiring goodwill c. Bargain price d. Quick start

Q: Matthew is an individual acting as a sales agent with the responsibility for finding new franchisees within a specified territory. Matthew is a(n): a. multiple-unit franchisor. b. area developer. c. franchisor representative. d. master licensee.

Q: Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves each 8-hour shift. If the productivity is increased by 10%, it would then be: A) 180 valves/hr. B) 200 valves/hr. C) 220 valves/hr. D) 880 valves/hr. E) 1760 valves/hr.

Q: Harold was given the chance to examine the tax returns and financial statements of a business he is considering for purchase. The seller asked him to sign a _____________ that prohibits Harold from sharing this confidential information with anyone else. a. franchise contract b. due diligence document c. franchise disclosure document d. non-disclosure agreement

Q: Gibson Valves produces cast bronze valves on an assembly line. If 1600 valves are produced in an 8-hour shift, the productivity of the line is: A) 2 valves/hr. B) 40 valves/hr. C) 80 valves/hr. D) 200 valves/hr. E) 1600 valves/hr.

Q: Business format franchising is best illustrated by the system offered by a. Goodyear Tires. b. Coca-Cola. c. Subway. d. Dr. Pepper.

Q: A foundry produces circular utility access hatches (manhole covers). Currently, 120 covers are produced in a 10-hour shift. If labor productivity can be increased by 20%, it would then be: A) 14.4 covers/hr. B) 24 covers/hr. C) 240 covers/hr. D) 1200 covers/hr. E) 10 covers/hr.

Q: A foundry produces circular utility access hatches (manhole covers). If 120 covers are produced in a 10-hour shift, the productivity of the line is: A) 1.2 covers/hr. B) 2 covers/hr. C) 12 covers/hr. D) 1200 covers/hr. E) 120 covers/hr.

Q: Each month Tomas must report his gross sales and pay a percentage of that amount to his franchisor. This percentage is: a. negotiable every month. b. finance charges. c. royalty fees. d. an investment cost.

Q: Illiteracy and poor diets have been known to cost countries up to what percent of their productivity? A) 2% B) 5% C) 10% D) 20% E) 50%

Q: Before making an offer for a business, Garland will want to a. talk to the customers. b. check the businesss website. c. perform due diligence. d. hire a broker.

Q: McDonalds corporation helps select the location for a new restaurant and provides financial assistance, training, marketing, and products. McDonalds engages in: a. product and trade name franchising. b. business format franchising. c. master licensing. d. area development.

Q: Productivity is the total value of all inputs to the transformation process divided by the total value of the outputs produced.

Q: Cheryl is on vacation across the country from her hometown and shes hungry. Ahead she sees the familiar Golden Arches and knows she can find her favorite hamburger. These Golden Arches are: a. a patent. b. a trade promotion. c. yellow to attract attention. d. a trademark.

Q: A knowledge society is one that has migrated from work based on knowledge to one based on manual work.

Q: Jeffreys job is to identify potential business people in his country who might want to do business using a particular brand name. When the contract is signed, Jeffrey then provides training to the business person. Jeffrey is most likely: a. a franchisee. b. a franchisor. c. a master licensee. d. a warehouser.

Q: Productivity is generally more difficult to improve in the service sector than in the manufacturing sector.

Q: In what way is a franchisee's control over the business greatly reduced? a. Most franchisors are located near the franchisee. b. The franchisees are technically employees of the franchisor. c. The franchisee is bound by the terms of the franchise contract. d. The franchisee is completely dependent on the franchisor for funding.

Q: How do services differ from goods? Identify five ways.

Q: Consider this quote: "If you can't follow somebody else, don't buy a franchise." Which characteristic of a franchise does this quote describe? a. High success rate b. Restrictions on growth c. Loss of entrepreneurial independence d. Location problems

Q: When a tangible component is not included in a service, such as with counseling, it is called a(n) ________.

Q: Which of the following is a similarity between goods and services? A) mass production B) consistency C) automation D) Both have quality standards. E) Both can usually be kept in inventory.

Q: Individuals or firms that possess the legal right to open multiple outlets in a given area are referred to as a. development franchisees. b. area developers. c. piggyback franchisees. d. multiple-unit owners.

Q: Martin operates an ABC franchise. Recently the franchisor has attempted to make changes to the contract that would increase Martins costs so as to make the business unprofitable. The franchisor is engaging in: a. master licensing. b. encroachment. c. due diligence. d. churning.

Q: Which of the following attributes is most typical of a service? A) production and consumption occur simultaneously B) tangible C) mass production D) consistency E) easy to automate

Q: Which of the following is NOT a typical service attribute? A) intangible product B) easy to store C) customer interaction is high D) simultaneous production and consumption E) difficult to resell

Q: Freds company specializes in bringing together buyers and sellers of businesses. Fred is: a. a business broker. b. a master licensee. c. an area developer. d. a real estate agent.

Q: Which of the following services is LEAST likely to be unique, i.e., customized to a particular individual's needs? A) dental care B) hairdressing C) legal services D) elementary education E) computer consulting

Q: In addition to the regular monthly payment of a percentage of gross sales to her franchisor, Wilma is required to submit a smaller percentage for advertising costs. She is willing to do this because: a. otherwise she cannot operate her franchise. b. she receives a discount on the cost of her inventory. c. Wilmas budget is too small for her advertising to be effective. d. the franchisor promotes the business both locally and nationally, reinforcing the brand name.

Q: Which factor is a non-quantitative factor of valuing a business? a. Future community development b. Size of the buildings c. Number of employees who will stay with the company d. Employee salaries

Q: Which is NOT true regarding differences between goods and services? A) Services are generally produced and consumed simultaneously; tangible goods are not. B) Services tend to be more knowledge-based than goods. C) Services tend to have a more inconsistent product definition than goods. D) Goods tend to have higher customer interaction than services. E) Reselling is unusual in services; goods often have some residual value.

Q: Besides the up-front money required of a franchisee, Stuart will have to pay building costs and purchase inventory and equipment. This type of expense is called: a. investment costs. b. the initial franchise fee. c. royalty payments. d. marketing fees.

Q: Which is NOT true regarding differences between goods and services? A) Tangible goods are generally produced and consumed simultaneously; services are not. B) Most goods are common to many customers; services are often unique to the final customer. C) Services tend to have a more inconsistent product definition than goods. D) Services tend to have higher customer interaction than goods. E) None, i.e., all of the above are true.

Q: The cost of a franchise may include a. royalty payments. b. higher operational costs. c. a one-time federal franchise tax. d. higher labor costs.

Q: The service sector makes up approximately what percentage of all jobs in the United States? A) 12% B) 40% C) 66% D) 86% E) 94%

Q: A disadvantage of franchising is a. reduced risk of failure. b. access to a proven system. c. restricted sales territories. d. immediate economies of scale.

Q: Which of the following is the best example of a pure service? A) counseling B) oil change C) heart transplant D) electric Co-Op E) restaurant

Q: Most franchise experts recommend that the FDD be examined carefully by a. regulators that specialize in such documents. b. a franchise attorney and an accountant. c. everyone associated with the potential startup. d. suppliers that may be used if the startup is successful.