ENT 396 CH.7

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

at least ten days before signing a contract or paying any money

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

False

The Federal Trade Commission does not provide information on franchise success

False

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

How many personnel are going to remain?

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

Is the building heated with gas or electricity?

Who must negotiate a final deal to purchase a business?

The potential buyer

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

True

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.

True

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

True

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

True

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

True

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

True

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

True

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

True

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

What is the owner's personal net worth?

An agreement not to compete is also known as

a legal restraint of trade

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

a minority interest

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.

franchise

The individual who buys the franchise is the

franchisee

Which of the following is an intangible asset?

goodwill

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

new-new

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

pay a fee

An advantage to buying an ongoing business is

reduced concern over future operations. time and effort are reduced it may be purchased at a bargain price.

The inventory should be examined for which of the following?

salability correspondence between the physical count and the book count up-to-datedness

The advantages of franchising include:

training and guidance. brand-name appeal. proven track record.