Hospitality Management Main Exam (correct answers) There are two (2) main driving forces in the development and operation of the hotel business, what are they? correct answers Franchising and Management contracts What is franchising? correct answers -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 answers -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 answers 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 answers -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 answers 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 answers -an average agreement is based on three or four percent of room revenue.Which hotels are the world's leading franchisors of hotels? correct answers - InterContinental Hotels and Resorts -Wyndham Worldwide -Choice Hotels International What are examples of benefits to the franchisee? correct answers • 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 answers • 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. 1 / 2
• Franchisees must maintain all standards set by the franchisor.What are examples of benefits to the franchisor or franchise company? correct answers • Increased market share and recognition • Up-front fees What are examples of drawbacks to the franchise company? correct answers • 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 answers -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 answers -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 answers -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 answers -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 answers Associations that refer guests to other participating members.Which hotels would be part of referral associations? correct answers independent hotels What types of benefits would referral associations offer hotels? correct answers -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.-also provides marketing support services and a reservation center.
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