MGMT440 ch7-8
The person who sells the franchise is usually required to do all of the following except
pay a fee
Financial equity instruments, which give investors a share of the ownership, may include
preferred stock
Which of the following is nto a type of debt financing?
private placement
Which of the following is an example of an intangible asset?
reputation
The buyer is likely to have power over the seller in the negotiation to purchase a business if
the seller has already purchased another business
The Franchise Disclosure Document (FDD) contains how many categories?
23
Competitor factors in buying decision do not include
age of the competition's owners
Which of the following is more likely than the others to be deemed a potential danger of social lending?
business plan disclousure
The most common source of debt fincancing is
commercial banks
The person who purchases the franchise is usually required to do all of the following except
design a logo for the unit
All of the following should be examined when evaluating the selection of venture except
employees
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
The extra value a business can command in a sale is known as
goodwill
Which of the following is not one of the eight critical factors that venture capitalists use in the evaluation of new ventures?
managerial structure
Many new ventures find that debt financing is
necessary
A(n) ___ approach indicates the importance of people's awareness of their daily lives for developing new business ideas.
new-new
Business-related reasons for selling may include all of the following except
changes in location
Much franchise litigation has arisen over franchising fees.
False
Regulation D augments the regulations for reports and statements required for selling stock to private parties, friends, employees, customers, relatives, local professionals.
False
Sales records are of very little value to a buyer in evaluating a company's worth.
False
Venture capitalists are quick to invest.
False
Which of the following is an important question for the entrepreneur to ask when evaluating the venture capitalist?
How many deals has the firm actually made in this field?
Informal risk capitalists are often referred to as business angels.
True
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
Which of the following is not a factor regarding the condition of inventory?
suppliers
Which of the following does not represent a category of angel investors?
technology angels
A franchise is any arrangement where the owner has licensed others to sell goods or services by which of the following?
trademark
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 guidence to the franchisee.
True
Sources of debt fincancing include trade credit, accounts receivable financing, factoring, and finance companies.
True
The average size of social loans is around $17,000.
True
The business plan is a critical element in a new-venture proposal.
True
The most common sources of debt financing are commercial banks.
True
The most important area to examine prior to purchasing a business is company profitability.
True
Evaluating franchise opportunities include finding out more about all of the following except the
franchise location
The franchisee's responsibilites do not include
designing the product specifics
Which of the following is not considered by entrepreneurs when examining opportunities for possible ventures?
the cost of replacing an employee
P2P lenders charge fees for brokering and servicing loans and collect penalties for late payments.
True
The prospective investor should obtain 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
Use of debt to finance a new venture involves a payback of funds plus an interest fee for the use of the money.
True
When purchasing an existing business, the prospective owner should conduct an assessment of the business's current group of employees.
True
When using P2P lending, one potential danger may be an uncertain regulatory environment.
True
Which of the following is not a key question to ask when buying a business?
Is the building heated with gas or electricity?
Regulation D defines seperate exemptions that are based on the amount of money being raised. Which of the following is not a rule that accompanies these exemptions?
Rule 503
Commons tock is the least basic form of ownership.
False
Corporate venture capital can offer strategic and tactical advice, an operating budget, and credibility but started to decline in 2017, and this trent is expected to continue.
False
A good idea is important, but a good management team is even more important.
True
A method of raising capital is through the private placement of securities.
True
"Piggybacking" one's way into a new business involves a ___ approach
new-old
When going public with public offerings an advantage might be the
size of the company's capital amount
SBIC stands for
small-business investment companies
Equity financing is money invested in the venture with legal obligations to repay the principal amount or pay interest on it.
False
Crowdfunding provides entrepreneurs with access to beta-testing and market feedback.
True
Generally, the larger and more successful the franchisor, the greator the franchise fee that is charged.
True
Which of the following is not a question commonly asked by banks of entrepreneurs?
What interest rate did you have in mind?
Which of the following is one of the most important questions for entrepreneurs to ask regarding venture capitalists?
What is it like to work with their firm?
When securing a bank loan, which of the following is not a question an entrepreneur should be prepared to answer?
What is the price of your product?
The franchisor's responsibility does not include providing
a business relationship
Business-related reasons for selling do not include which of the following?
changes in the product supply chain