MGMT440 ch7-8

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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


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