Chapter 7

Researchers developed a "Newness Framework" to help depict the differing dimensions of newness that ventures could exhibit, which include which of the following dimensions:

Technology newness

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. all of these.

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 all of these

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

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

True; Of the numerous advantages to buying an ongoing venture, one of the most important is the time and effort associated with starting a new enterprise are eliminated.

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

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

The social and economic environment affecting the local and regional entrepreneurship is now commonly referred to as:

entrepreneurial ecosystem

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

Which of the following is an entity that helps new ventures to develop by providing services such as management training and office space?

business incubator

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

new-new

Who must negotiate a final deal to purchase a business?

The potential buyer

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

True; A legal disclosure document entitled the Franchise Disclosure Document (FDD) must now be presented to prospective buyers of franchises in the presale disclosure process in the United States.

Franchisees have the option of whether to use the logo and symbols of the franchisor.

False; Since the franchisor provides the identifying symbols, logos, designs, and facilities, the franchisor generally exercises a fair amount of franchisor control over the operation in order to achieve a degree of uniformity. If entrepreneurs do not follow franchisor directions, they may not have their franchise license renewed when the contract expires.

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

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

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

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

True; The most effective way to start a new business is to create a new and unique product or service through the new-new approach and the next-best way is to adapt an existing product or service or to extend an offering into an area wherein it is not presently available through the new-old approach.

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

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

The rise of incubators, accelerators, and entrepreneurial ecosystems may be an important pathway for entrepreneurs to pursue.

True; When examining the pathways to entrepreneurial ventures, it is important to understand the rise of incubators, accelerators, and entrepreneurial ecosystems because they may be an important pathway for an entrepreneur to pursue.

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; When purchasing a business, request that the seller retain a minority interest in the business or establish the final purchase price dependent on the performance of the business over a three-to-five-year span, to keep the seller concerned about the immediate future performance of the business.

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

True; When purchasing an existing business, the prospective owner should conduct an assessment of the current group of employees. He or she should review existing performance evaluations and talk with the current owners about the quality of each employee and his or her value to the business.

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