Exam 4: Franchises and Buyouts

To reduce costs, a franchise consultant can substitute for a licensed attorney experienced in the evaluation of legal documents related to franchising agreements.

Investment costs related to franchising include all of the following except

The UFOC is the Uniform Franchise Offering Circular.

Briefly compare and contrast "product and trade name franchising" with "business format franchising."

The offer and sale of a franchise are regulated by

An entrepreneur would choose a franchise over an independent startup most likely because of the

Define the terms franchising, franchiser, and franchisee.

In evaluating the financial health of an existing business that a buyer is interested in purchasing, the following historical documents must be examined except

List and describe the cost components of becoming a franchisee.

Individuals or firms that possess the legal right to open multiple outlets in a given area are referred to as

Products and trade name franchising is best illustrated by the system offered by

One of the most important features of the franchise contract is the provision related to

Anil Yadav is the largest Jack-in-the-Box franchisee in the U.S. His first step on the road to multi-unit franchising was

Franchising offers both a proven line of business and product/service identification.

The practice of putting one franchise right next to another is referred to as Piggyback franchising.

Government publications offering information about franchises include

You Make the Call-Situation 4 Growth prospects have never been brighter for this 22-year-old manufacturer of custom-designed skylights, which has grown to more than $2 million in annual sales by letting light into homes, museums, symphony halls, upscale commercial buildings, and more. The California company ended last year with its strongest sales quarter since its current owners bought the business in 1995. Some 60 percent of its revenues come from jobs within California, where construction has remained steady throughout the economic downturn. Furthermore, the energy crisis has driven up demand for skylights, which pay for themselves in energy savings. The manufacturer's state-of-the-art products also protect furniture and carpeting against fading from sunlight. The owners of the business are selling because they intend to move overseas. Their 22 staffers, including two installation crews and four sales and marketing professionals, appear willing to stay and help a new owner "illuminate" a variety of new growth opportunities. The asking price is $675,000, with 60 percent down. The owners will consider financing a portion of the deal. (Source: Based on Jill Andresky Frazer, "A Blue-Sky Deal," Inc., Vol. 24, No. 7(July 2002), p. 40.)

The franchiser being evaluated should be a primary source of information about a franchise.

Valuing a company is an easy task that results in a precise figure.

When evaluating the financial data of a business you are considering purchasing, which issue(s) should you look for?