Question 1

A franchisor makes money when the franchisee stays in business, needs lots of inputs, and pays continuing royalties.

Accepted Answer

A) True 
 B)False

Question 2

A franchisor is a firm that originates the idea for a business and develops the operational methods.

Accepted Answer

A) True 
 B)False

Question 3

The cost of a business should include

Accepted Answer

A) a premium for past performance. 
B) a premium for future performance. 
C) a premium for current performance. 
D) none of these. 
A) a premium for past performance. 
B) a premium for future performance. 
C) a premium for current performance. 
D) none of these.

Question 4

Buying an existing business does not take as much planning and thought as starting a business from scratch.

Accepted Answer

A) True 
 B)False

Question 5

New Ventures Co., a consulting firm, follows attorneys, trade associations, and bankruptcy filings in the United States to find businesses that can be bought.Then, they find prospective entrepreneurs who are interested in buying these businesses and sell these businesses for a margin.In this scenario, New Ventures Co.is a ________.

Accepted Answer

A) business representative 
B) business analyst 
C) business broker 
D) research expert 
A) business representative 
B) business analyst 
C) business broker 
D) research expert

Question 6

Which of the following is true of franchising?

Accepted Answer

A) A franchise is essentially an unpackaged business, where the policies, procedures, and buying patterns have to be established prior to beginning operations. 
B) The purchase of a well-honed, thoughtfully positioned franchise can dramatically decrease the downside risk inherent in the process of starting a business. 
C) There is no difference in the risk of buying a franchise and buying an existing business. 
D) Franchising is viewed as a new business entrepreneur's creation of a business from scratch. 
A) A franchise is essentially an unpackaged business, where the policies, procedures, and buying patterns have to be established prior to beginning operations. 
B) The purchase of a well-honed, thoughtfully positioned franchise can dramatically decrease the downside risk inherent in the process of starting a business. 
C) There is no difference in the risk of buying a franchise and buying an existing business. 
D) Franchising is viewed as a new business entrepreneur's creation of a business from scratch.

Question 7

Franchising is viewed as the creation of a new business from a well-established formula.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about the purchase of a franchise is NOT correct?

Accepted Answer

A) A franchisee has the right to change the operating procedures to improve the business's profitability in his or her territory. 
B) A franchisee has the right to use the franchisor's brand name. 
C) A franchisor provides operational advice to a franchisee. 
D) A franchisor provides some level of marketing advice and assistance. 
A) A franchisee has the right to change the operating procedures to improve the business's profitability in his or her territory. 
B) A franchisee has the right to use the franchisor's brand name. 
C) A franchisor provides operational advice to a franchisee. 
D) A franchisor provides some level of marketing advice and assistance.

Question 9

A potential franchisee must be vetted, or evaluated, by a franchisor before receiving the complete United Form Offering Contract (UFOC).

Accepted Answer

A) True 
 B)False

Question 10

Which of the following documents specifies the information that must be provided to a franchisee prior to his or her investment?

Accepted Answer

A) Uniform Franchise Offering Circular 
B) Enterprise Bargaining Agreement 
C) Bilateral Investment Treaty 
D) Multilateral Agreement on Investment 
A) Uniform Franchise Offering Circular 
B) Enterprise Bargaining Agreement 
C) Bilateral Investment Treaty 
D) Multilateral Agreement on Investment

Question 11

Franchisors typically provide the

Accepted Answer

A) operational systems. 
B) monitoring techniques to run the business. 
C) both of these. 
D) none of these. 
A) operational systems. 
B) monitoring techniques to run the business. 
C) both of these. 
D) none of these.

Question 12

When buying a franchise, what are the specific areas that should be evaluated?

Accepted Answer

Accounting, marketing, trainin

Question 13

________ is a broad area that encompasses such things as brochures, signs, logos, television advertisements, newspaper advertisements, sales techniques, and internal business design.

Accepted Answer

A) Marketing information system 
B) Decision support system 
C) Accounting support 
D) Marketing support 
A) Marketing information system 
B) Decision support system 
C) Accounting support 
D) Marketing support

Question 14

Which of the following is true of a franchise agreement made between a franchisor and a franchisee?

Accepted Answer

A) It directs the franchisor to spend significant time being visible in the new franchise operation, talking with employees, and making suggestions. 
B) It contains clauses requiring the purchase of supplies and the displaying of marketing material. 
C) It is enforced at the federal level, and the jurisdiction lies with the federal court. 
D) It commands the franchisee to make all significant changes in one day so as to alleviate any lingering concerns by the employees. 
A) It directs the franchisor to spend significant time being visible in the new franchise operation, talking with employees, and making suggestions. 
B) It contains clauses requiring the purchase of supplies and the displaying of marketing material. 
C) It is enforced at the federal level, and the jurisdiction lies with the federal court. 
D) It commands the franchisee to make all significant changes in one day so as to alleviate any lingering concerns by the employees.

Question 15

The new owner of an existing business should avoid implementing new policies and standards during the transition period in order to avoid upsetting the employees.

Accepted Answer

A) True 
 B)False

Question 16

Entrepreneurs should attempt to buy a troubled business at a discount even if they do not have specific skills and a plan to turn around a business that is in significant decline.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true of a franchise process?

Accepted Answer

A) The founding of a franchise is quite different in form and method from creating a new business from scratch. 
B) A market analysis by a franchisor is the best available method to understand a market and to organize franchise operations. 
C) A significant up-front cash payment is necessary for making an initial fee payment by a franchisee. 
D) The entrepreneur can easily leave the franchisee business if he or she does not enjoy the business venture. 
A) The founding of a franchise is quite different in form and method from creating a new business from scratch. 
B) A market analysis by a franchisor is the best available method to understand a market and to organize franchise operations. 
C) A significant up-front cash payment is necessary for making an initial fee payment by a franchisee. 
D) The entrepreneur can easily leave the franchisee business if he or she does not enjoy the business venture.

Question 18

Each franchisor will have a different package to sell a franchisee.

Accepted Answer

A) True 
 B)False

Question 19

Negotiations between a franchisee and a franchisor should explore

Accepted Answer

A) up-front capital requirements. 
B) financing arrangements. 
C) continuing fees. 
D) all of these. 
A) up-front capital requirements. 
B) financing arrangements. 
C) continuing fees. 
D) all of these.

Question 20

The more the training opportunities that are offered as part of a franchise fee, the better it is for the franchisee.

Accepted Answer

A) True 
 B)False

A franchisor makes money when the franchisee stays in business, needs lots of inputs, and pays continuing royalties.

A franchisor is a firm that originates the idea for a business and develops the operational methods.

The cost of a business should include

Buying an existing business does not take as much planning and thought as starting a business from scratch.

Which of the following is true of franchising?

Franchising is viewed as the creation of a new business from a well-established formula.

Which of the following statements about the purchase of a franchise is NOT correct?

A potential franchisee must be vetted, or evaluated, by a franchisor before receiving the complete United Form Offering Contract (UFOC).

Which of the following documents specifies the information that must be provided to a franchisee prior to his or her investment?

Franchisors typically provide the

When buying a franchise, what are the specific areas that should be evaluated?

________ is a broad area that encompasses such things as brochures, signs, logos, television advertisements, newspaper advertisements, sales techniques, and internal business design.

Which of the following is true of a franchise agreement made between a franchisor and a franchisee?

The new owner of an existing business should avoid implementing new policies and standards during the transition period in order to avoid upsetting the employees.

Entrepreneurs should attempt to buy a troubled business at a discount even if they do not have specific skills and a plan to turn around a business that is in significant decline.

Which of the following statements is true of a franchise process?

Each franchisor will have a different package to sell a franchisee.

Negotiations between a franchisee and a franchisor should explore

The more the training opportunities that are offered as part of a franchise fee, the better it is for the franchisee.

The Twenty-First-Century Entrepreneur

Individual Leadership and Entrepreneurial Start-Ups

Business Idea Generation and Initial Evaluation

External Analysis

Business Mission and Strategy

Analyzing Cash Flow and Other Financial Information

Financing and Accounting

Business Financial Analysis

Legal Issues With a New Business

Human Resource Management

Marketing

Establishing Operations

Exit-Harvest-Turnaround

Filters

Exam 14: Franchising and Purchasing an Existing Business

A franchisor makes money when the franchisee stays in business, needs lots of inputs, and pays continuing royalties.

A franchisor is a firm that originates the idea for a business and develops the operational methods.

The cost of a business should include

Buying an existing business does not take as much planning and thought as starting a business from scratch.

Which of the following is true of franchising?

Franchising is viewed as the creation of a new business from a well-established formula.

Which of the following statements about the purchase of a franchise is NOT correct?

A potential franchisee must be vetted, or evaluated, by a franchisor before receiving the complete United Form Offering Contract (UFOC).

Which of the following documents specifies the information that must be provided to a franchisee prior to his or her investment?

Franchisors typically provide the

When buying a franchise, what are the specific areas that should be evaluated?

________ is a broad area that encompasses such things as brochures, signs, logos, television advertisements, newspaper advertisements, sales techniques, and internal business design.

Which of the following is true of a franchise agreement made between a franchisor and a franchisee?

The new owner of an existing business should avoid implementing new policies and standards during the transition period in order to avoid upsetting the employees.

Entrepreneurs should attempt to buy a troubled business at a discount even if they do not have specific skills and a plan to turn around a business that is in significant decline.

Which of the following statements is true of a franchise process?

Each franchisor will have a different package to sell a franchisee.

Negotiations between a franchisee and a franchisor should explore

The more the training opportunities that are offered as part of a franchise fee, the better it is for the franchisee.

The Twenty-First-Century Entrepreneur

Individual Leadership and Entrepreneurial Start-Ups

Business Idea Generation and Initial Evaluation

External Analysis

Business Mission and Strategy

Analyzing Cash Flow and Other Financial Information

Financing and Accounting

Business Financial Analysis

Legal Issues With a New Business

Human Resource Management

Marketing

Establishing Operations

Exit-Harvest-Turnaround

Filters