HOSPITALITY MANAGEMENT EXAM #5 QUESTIONS WITH
CORRECT ANSWERS
There are two (2) main driving forces in the development and operation of the hotel
business, what are they? - correct answer Franchising and Management contracts
What is franchising? - correct answer -A concept that allows a company to expand
quickly by allowing qualified people to use the systems, marketing, and purchasing
power of the franchise.
How does franchising work? - correct answer -the company (franchisor) grants certain
rights to the franchisee like rights to use their trademark, signs, proven operating
systems, operating procedures, and its reservation system, marketing know-how,
purchasing discounts, etc. For a fee
How does franchising work for the franchisee? - correct answer they agree by signing
the franchise contract to operate the restaurant, hotel or franchise outlet in accordance
with the guidelines set by the franchisor
How did franchising begin? - correct answer -Franchising hotels in the United States
began in 1907, when the Ritz Development Company franchised the Ritz-Carlton name
in New York City.
What are the two (2) major challenges that franchising presents for the franchisor, and
why? - correct answer maintenance of quality standards and avoidance of financial
failure on the part of the franchisee
What is an average agreement between a franchisor and the franchisee? - correct
answer -an average agreement is based on three or four percent of room revenue.
Which hotels are the world's leading franchisors of hotels? - correct answer -
intercontinental Hotels and Resorts
-Wyndham Worldwide
-Choice Hotels International
What are examples of benefits to the franchisee? - correct answer • A set of plans and
specifications from which to build
• National advertising
• A centralized reservation system (CRS)
• Participation in volume discounts for purchasing furnishings, fixtures, and equipment
• Listing in the franchisor's directory
• Low fee percentage charged by credit card companies
What are some examples of some drawbacks for a franchisee? - correct answer •
Franchisees must pay high fees, both to join and ongoing.
• Central reservations generally produce between 17 and 26 percent of reservations.
, • Franchisees must conform to the franchisor's agreement.
• Franchisees must maintain all standards set by the franchisor.
What are examples of benefits to the franchisor or franchise company? - correct answer
• Increased market share and recognition
• Up-front fees
What are examples of drawbacks to the franchise company? - correct answer • The
need to be very careful in the selection of franchisees
• Difficulty in maintaining control of standards
How can franchising be in your future? - correct answer -you may work for a franchise
-you may own a franchise
-you may work for a franchisee
What are advantages to buying a franchise rather than starting your own independent
business? - correct answer -by working with a larger company you get the benefits of its
experience in running the business that you have chosen to enter.
-the company might provide cash flow
-The company might also provide other support services at little or no cost, such as
marketing and advertising, site selection, construction plans, assistance with financing,
and so on.
-reduces your risk of failure
What are some disadvantages of franchising? - correct answer -Your expectations of
success may not be met.
-Perhaps the business does not have the potential that you expect
-perhaps you are not willing to invest the time needed.
-an overzealous or dishonest franchisor representative can mislead franchisees.
-Freedom is restricted
Before considering to undertake a franchise business, what should a potential
franchisee do? - correct answer -research and have a full discussion with family,
friends, and business advisors,
-You should carefully weigh whether you are psychologically suited to be a franchisee.
What are referral associations? - correct answer Associations that refer guests to other
participating members.
Which hotels would be part of referral associations? - correct answer independent
hotels
What types of benefits would referral associations offer hotels? - correct answer -share
a CRS and a common image, logo, or advertising slogan.
-referrals may offer group-buying discounts to members, as well as management
training and continuing education programs.
CORRECT ANSWERS
There are two (2) main driving forces in the development and operation of the hotel
business, what are they? - correct answer Franchising and Management contracts
What is franchising? - correct answer -A concept that allows a company to expand
quickly by allowing qualified people to use the systems, marketing, and purchasing
power of the franchise.
How does franchising work? - correct answer -the company (franchisor) grants certain
rights to the franchisee like rights to use their trademark, signs, proven operating
systems, operating procedures, and its reservation system, marketing know-how,
purchasing discounts, etc. For a fee
How does franchising work for the franchisee? - correct answer they agree by signing
the franchise contract to operate the restaurant, hotel or franchise outlet in accordance
with the guidelines set by the franchisor
How did franchising begin? - correct answer -Franchising hotels in the United States
began in 1907, when the Ritz Development Company franchised the Ritz-Carlton name
in New York City.
What are the two (2) major challenges that franchising presents for the franchisor, and
why? - correct answer maintenance of quality standards and avoidance of financial
failure on the part of the franchisee
What is an average agreement between a franchisor and the franchisee? - correct
answer -an average agreement is based on three or four percent of room revenue.
Which hotels are the world's leading franchisors of hotels? - correct answer -
intercontinental Hotels and Resorts
-Wyndham Worldwide
-Choice Hotels International
What are examples of benefits to the franchisee? - correct answer • A set of plans and
specifications from which to build
• National advertising
• A centralized reservation system (CRS)
• Participation in volume discounts for purchasing furnishings, fixtures, and equipment
• Listing in the franchisor's directory
• Low fee percentage charged by credit card companies
What are some examples of some drawbacks for a franchisee? - correct answer •
Franchisees must pay high fees, both to join and ongoing.
• Central reservations generally produce between 17 and 26 percent of reservations.
, • Franchisees must conform to the franchisor's agreement.
• Franchisees must maintain all standards set by the franchisor.
What are examples of benefits to the franchisor or franchise company? - correct answer
• Increased market share and recognition
• Up-front fees
What are examples of drawbacks to the franchise company? - correct answer • The
need to be very careful in the selection of franchisees
• Difficulty in maintaining control of standards
How can franchising be in your future? - correct answer -you may work for a franchise
-you may own a franchise
-you may work for a franchisee
What are advantages to buying a franchise rather than starting your own independent
business? - correct answer -by working with a larger company you get the benefits of its
experience in running the business that you have chosen to enter.
-the company might provide cash flow
-The company might also provide other support services at little or no cost, such as
marketing and advertising, site selection, construction plans, assistance with financing,
and so on.
-reduces your risk of failure
What are some disadvantages of franchising? - correct answer -Your expectations of
success may not be met.
-Perhaps the business does not have the potential that you expect
-perhaps you are not willing to invest the time needed.
-an overzealous or dishonest franchisor representative can mislead franchisees.
-Freedom is restricted
Before considering to undertake a franchise business, what should a potential
franchisee do? - correct answer -research and have a full discussion with family,
friends, and business advisors,
-You should carefully weigh whether you are psychologically suited to be a franchisee.
What are referral associations? - correct answer Associations that refer guests to other
participating members.
Which hotels would be part of referral associations? - correct answer independent
hotels
What types of benefits would referral associations offer hotels? - correct answer -share
a CRS and a common image, logo, or advertising slogan.
-referrals may offer group-buying discounts to members, as well as management
training and continuing education programs.
