asset pricing. True or false: A disadvantage of buying an existing business is that operating processes and policies have already been established. C. Potential to reduce distribution costs He is considering applying to small firms because he knows that small businesses have traditionally added _____ new jobs to the economy. Degree of control and importance of channel members. NOT: anticipated costs of operation. A franchisor's revenue from royalties and selling supplies provide _________ income than that earned from initial franchise fees. E. All of the above statements are accurate. The most common form of business ownership in the United States is the corporatio. A. Which one of the following is not one of the levels for development? Which characteristic is not considered a positive of franchising? a. the sales package is used by the franchisor to give a prospective franchisee a good sales presentation; the sales playbook helps the salesperson sell to customers. c. There is an established set of process. Chapter 4 Franchises and Buyouts Assessment Flashcards A) Franchisor agreement WebThe way to approach a new business venture is to think up a good or service that is unique. old-new d. Franchises include the business name and a general plan for business operations. one time franchise fee and monthly royalties based on sales. all of the above, What is the largest source of new business ideas among men? c. c. If he seeks the average-size SBA-guaranteed business loan he will borrow, Money invested in small, new, or struggling firms that have the potential to become very successful is called. Jennifer and Raleigh are considering starting a small business and are weighing the pros and cons of doing so. All of the following are true about small business except. b. Is a specialized broker who handles all arrangements for closing a buyout, The purchase price of a business is determined by the negotiation between. b. Because of disputes between franchisors and franchisees, a program was instituted to arbitrate them. What is the effect of such a tax on Leticia would like to start a business and has investigated starting her own or buying a franchise. d. Competitor factors in a buying decision do not include As it pertains to the scope and importance of franchising, which of the following statements is most accurate? The person who sells the franchise is usually required to do all of the following except: risk versus reward. When one designs a unique good or service, the individual is said to have used a(n) ____approach to starting the business. Which of the following statements regarding the franchise fee are correct? a. What Should the Franchisor Control? - Franchise Law, Disputes the franchisor offering a standard,well-known product or service. the cost of replacing an employee. The "Federal Trade Commission" does not provide information on franchise success. of dollars instead of units. d. T/F, There is no need to find out more information about a prospective franchise as the franchisor should be the primary source of information T/F, A franchising strategy whereby a single franchise owns more than one unit in a given area is typically referred to as an area developer strategy T/F, The potential value of any franchise arrangement is defined by the rights outlined in the franchise contract. An agreement not to compete is also known as The owner may be in trouble with suppliers. He wants the business to succeed. A wholesaler purchases products in quantity from _____ and then resells them to retailers. Hobby One of the more interesting ratios for franchising is the Location Selection Ratio or Sales/Costs ratio. E) All of the above, Products and services in a franchise may not be altered, added, or dropped without ________. Generally, the larger and more successful the franchisor, the greater the franchise fee that is charged. instead of liquidation value. High-tech ___ entrepreneurship is exploding. a. Who is responsible for these activities and outcomes? His actions are possible because small businesses. A) Product and trade-name franchising As a franchisee you will benefit from the purchasing power of the franchisor to get lower costs and improved vendor service. Trade associations for the industry. Chance, What is an often overlooked asset when acquiring a new business? Franchisee operational efficiency is more important than working relationships between franchisors and franchisees firms that have complex internal systems to execute, that draw from a limited pool of qualified employees, or require significant amounts for training to assure franchisee competence in delivery of the system's products or services. Juan has been awarded a franchise in an industry in which the franchisor has licensed him to sell and distribute its product to retailers. b. E) Brand, Subway restaurants can be found ________. All of these are ways a franchisor makes money; People who own shares of stock in a corporation are the owners of the corporation, The antitrust legislation law that bans false advertising is the, in a partnership, any losses the business incurs will be shared by all the partners. Automobile dealerships and ___ were the primary uses for franchises in the early days of franchise agreements. D. They are most common among automobile and soft drink channels. Suggests the franchisor provides relatively little in the way of management assistance to the franchisees. Which of the following is not an ongoing cost of franchises? a. franchising It is so successful that she has decided to allow others to use her business name, materials, and methods in operating their own business for a fee. Debt Service c. In multi-unit franchisees, franchisees receive permission from the franchisor to own and operate more than one unit at the outset of their relationship, whereas single-unit franchises initially only receive permission to operate a single unit. d. The business franchise model is always an appropriate model to ensure a high degree of control, regardless of the industry. A trial period of at least 3 years C. Court permission D. Notice to the Franchisors must have a high-quality support The franchisee and franchisor are linked by a bond of voluntary cooperation rather binding contracts. a. Which of the following things is NOT true about the accounting process? About how much work should she expect to do to make the franchisee successful? The most important area to examine prior to purchasing a business is company profitability. collaboration with suppliers through Internet, NOT: franchisors Henry approaches her about operating his own business under the terms above. C) Specific times must be scheduled. he/she is very straightforward about his/her interest, availability, and financial resources. journal, general ledger, financial statements. A franchisor pays a fee to obtain a franchise. Much franchise litigation has arisen over termination of owners. d. When Reno purchases the McDonald's she will be expected to supply, labor and capital and will own and operate the outlet. This includes all of the following except: Why might it be a good idea for a franchisor to investigate several ASP vendors before choosing one? c. A lawyer Changes in zoning which affect the business. B) Eases the issues of start-up development a. E) None of the above is an exception. Franchisors sometimes act like a business partner. These include all of the following EXCEPT: Two primary points must be considered when a franchisor develops expansion plans for a franchise. new-old, When one discusses upside gain and downside loss, one is talking about Actions by franchisors to void the contracts of franchisees in order to sell the franchise to someone else and collect an additional fee. Bringing two or more franchise brands together within a single enterprise. The exercise of reasonable care in the evaluation of a business opportunity. E) None of the above, Franchisors are focused on creating wealth for ________. d. Which of the following best describes the industry she operates in? brand-name appeal. It has an established cash flow. D) Be proven franchises have a very high success rate compared to other small businesses. This demonstrates which advantage of a small business? It is a channel used exclusively for distribution of consumer durable goods. b. b. help out with financial assistance. C. Training. b. Start-up standards required of franchisees may include which of the following? BLAW CH 35 Flashcards | Quizlet c. Entitles the franchisee to business operational advice. Which of the following types of businesses benefit from being located near competitors? To better understand the demand for a product or service. Which one of the following is not a major question at the onset? d. new-old economic efficiency? An individual looking to buy a franchise should _________. Fundamentals of Financial Management, Concise Edition, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese. Are You Still a Franchisee When the Franchisor Controls Everything? c. One downside for franchisors participating in franchise channels is: E. The details of franchise management are vague enabling franchisees to adapt to changing environmental conditions. a. The two main reasons for failure in business are: NOT: inadequate business plan and poor management. B) Termination of the franchise There are few resources for franchise research. a legal restraint of trade. The inventory should be examined for which of the following? all of the above. This is a ___ business. the franchisee's revenue stream is fairly consistent because franchisers pay fixed fees and Franchisors benefit from the franchise agreement because they have. c. Firm's records Which of the following types of financial ratios measures how well a franchise meets its short-term debts or financial obligations? A realistic estimate for the cost of legal requirements to begin a franchising system could be: How many phases are included in the Franchise PERT Chart? A. The action plan covers 3 primary areas: the owner, the finances, and other vital factors. As a class assignment, business students were told to prepare a business plan for a business they would like to own. insurance What is the primary purpose of information systems in a mid-size franchise?