Chapter 8

Which of the following is not a legitimate way of bringing a new business idea to market?
1. a start-up
2. a business plan
3. a franchise
4. a buy-out
5. a buy-in
Which of the following is not a recognized legal form in the UK?
1. joint venture
2. cooperative
3. sole trader
4. private limited company
5. public limited company
Which of the following is a recognized disadvantage of setting up as a start-up as compared with other routes to market entry?
1. less satisfaction of the owners
2. less help from various agencies
3. the business starts with a clean sheet
4. there are more funds required
5. there is a high failure rate
Franchises were first introduced in to the UK on a major scale:
1. from 1910-19
2. from 1920-29
3. from 1930-39
4. from 1940-49
5. from 1950-59
Which sector has most UK-based franchise operations?
1. Store retailing
2. Property services
3. Hotels and catering
4. Transport and vehicle services
5. Personal services
What is the minimum total investment required for starting a McDonald’s franchise?
1. £10,000
2. £50,000
3. £100,000
4. £150,000
5. £250,000
Which of the following statements about franchisee charges is not correct?
1. The longer the franchise contract, the smaller the initial fee
2. The greater the reliance on the franchisor’s efforts and support, the higher the fee
3. Where ongoing fees are absent, it is usually the case that mar-ups or rebates on products supplied to franchisees substitute them
4. Some ‘special’ fees may also be charged by the franchisor for services such as training in the use of new software
5. Well known brands tend to have higher minimum initial investments than other franchises
In 2004, what percentage of franchisors withdrew from the market, either as a result of commercial failure, dispute or some other reason?
1. 3.5%
2. 6.5%
3. 9.5%
4. 12.5%
5. 15.5%
The Bolton Committee excluded franchises from its review of the UK small business sector. True / False?
1. True
2. False
Which of the following statements is incorrect?
1. Franchising is a way of expanding a small business into a big business in a relatively short time
2. Franchisees tend to be under-motivated individuals not prepared to accept rewards in line with the results of their business
3. Franchising inevitably means loss of control compared to a conventional branch outlet
4. Failure of a single franchisee can do considerable damage to the reputation of the franchisor
5. Franchisees are becoming more organized as groups in their dealings with franchisors

Chapter 8

Quiz