bus 139 hw ch 05 answers 1 of 2

BUS 139 Homework Chapter 5 Answers

Name __________________________________________ Date _________________

(Name and date required only if submitted in hard copy format.)

Scoring Rubric
Each item: 1.0 point.
(Yes, you can get 11 out of 10.)

1. Briefly explain each of these terms.

a. franchise – a licensing agreement between two organizations

b. franchisor – usually a large organization that provides intellectual property to

another, usually smaller organization

c. franchisee – an organization that purchases intellectual property from another

organization to run a business

d. franchise fee – a one-time fee paid by the franchisee to the franchisor

e. royalty fee – a periodic fee, typically monthly from the franchisee to the
franchisor, generally a percentage of the gross revenue

2. Of the items listed in the text, identify your notion of the two biggest advantages of
franchising to the franchisee. (No wrong answers to this one since it’s personal.)

a. marketing expertise

b. technical and managerial assistance

3. Of the items listed in the text, identify your notion of the two biggest advantages of
franchising to the franchisor.

a. expansion with limited capital

b. multiple sources of capital

4. Briefly explain each of these terms.

D Wilhelm 9 January 2020

bus 139 hw ch 05 answers 2 of 2

a. disclosure statement – information that franchisors are required to provide to

potential franchisees

b. due diligence – process of thoroughly investigating the accuracy of information

before entering into a business agreement

D Wilhelm 9 January 2020