Deck 7: Pathways to Entrepreneurial Ventures

Question 1

Which of the following is an intangible asset?

A)goodwill
B)inventory
C)plant
D)machinery

Answer 1

A

Question 2

The individual who buys the franchise is the

A)franchisee.
B)franchisor.
C)franchisette.
D)franchatter.

Answer 2

A

Question 3

The elimination of time and effort associated with starting a company is an advantage of acquiring an ongoing venture.

Answer 3

True

Question 4

A key question to ask when buying an on-going small business is which of the following?

A)How old is the business?
B)Where should you retire someday?
C)Can you become a millionaire by buying this business?
D)How many personnel are going to remain?

Question 5

In negotiating a deal to purchase an existing business,it is possible to request that the seller retain a minority interest in the firm.

Question 6

Franchisees have the option of using the logo and symbols of the franchisor.

Question 7

The terms upside gain and downside loss refer to the profits the business can make and the losses it can suffer.

Question 8

An advantage to buying an on-going business is

A)reduced concern over future operations.
B)time and effort are reduced
C)it may be purchased at a bargain price.
D)all of the above.

Question 9

The prospective investor should get as much information as possible on the franchisor.

Question 10

The Franchise Disclosure Document (FDD) is a legally required disclosure document that must be presented to potential franchisees during presale discussions.

Question 11

Perhaps the greatest advantage of buying a franchise,as compared to starting a new business or buying an existing one,is that the franchisor will usually provide both training and guidance to the franchisee.

Question 12

A ____ is a system of distribution that enables a supplier to arrange for a dealer to handle a specific product or service under certain mutually agreed upon conditions.

A)franchisee
B)franchise
C)franchisor
D)franchiser

Question 13

When purchasing an existing business,the prospective owner should conduct an assessment of the business's current group of employees.

Question 14

Which of the following is not a key question a prospective buyer needs to ask in buying a business?

A)Why is the owner selling?
B)What is the owner's personal net worth?
C)How many of the personnel will remain with the firm?
D)What type of competition exists?

Question 15

An agreement not to compete is also known as

A)a trade restriction clause.
B)a legal restraint of trade.
C)a waiver of competition clause.
D)a deferential sale of business clause.

Question 16

When one designs a unique good or service,the individual is said to have used a(n) ____approach to starting the business.

A)new-new
B)old-old
C)old-new
D)new-old

Question 17

The inventory should be examined for which of the following?

A)salability
B)correspondence between the physical count and the book count
C)up-to-datedness
D)All of the above.

Question 18

The Federal Trade Commission does not provide information on franchise success.

Question 19

An additional consideration to keep in mind when negotiating to purchase an existing business includes requesting that the seller retain __________ in the firm.

A)a minority interest
B)a majority interest
C)either a minority or majority interest
D)none of the above

Question 20

Uniqueness in a product or service can be demonstrated through a new-new approach or a new-old approach.

Question 21

When should a potential franchisee receive the FDD (Franchise Disclosure Document)?

A)two days before signing a contract or paying any money
B)at least ten days before signing a contract or paying any money
C)two days before signing a contract
D)at least ten days before paying any money

Question 22

Why did the Federal Trade Commission enact the Franchise Rule?

Question 23

The person who sells the franchise is usually required to do all of the following except:

A)pay a fee.
B)provide professional management training to the unit's staff.
C)help out with financial assistance.
D)provide continuing aid and a guidance to the person buying the franchise.

Question 24

Which is not a key question to ask when buying a business?

A)Why is the business being sold?
B)Is the building heated with gas or electricity?
C)What is the condition of the inventory?
D)How many of the employees will remain?

Question 25

Who must negotiate a final deal to purchase a business?

A)A lawyer
B)A CPA
C)The potential buyer
D)All of the above

Question 26

The advantages of franchising include:

A)training and guidance.
B)brand-name appeal.
C)proven track record.
D)all of the above.

Question 27

What is the role of business brokers in acquiring an established entrepreneurial venture?

Question 28

Briefly explain the new-old approach to creating new ventures.