Chapter 4-entrepreneurship

franchisor agreement

the __________ _________ explains what the franchisor is obligated to do for their franchisees & details the rights and obligations of the franchisees.

what are 3 advantages of starting your own business from scratch

1. get to make own decisions 2. create own destiny 3. completely independent

what are 6 reasons why a business might want to sell their business

1. insufficient profits 2. worry about economic conditions 3. fear of new competition 4. owner retiring 5. death of a partner 6. desire to do something different

what are 3 disadvantages of buying an established business

1. many are for sale because they are not making a profit 2. serious problems may be inherited 3. money is required

what are 3 disadvantages of starting your own business from scratch

1. no brand awareness 2. no training awareness 3. no training or assistance

what are 3 disadvantages of entering into a family business

1. senior management positions held by eldest members 2. family politics 3. difficult to retain quality employees

what are 3 advantages of buying an established business

1. already has established customers and employees 2. the seller may train the new owner 3. easier to borrow money

what are 2 advantages of entering into a family business

1. can make lots of money 2. sense of mission

name 2 things the evaluate when looking at different franchises to possibly buy

1. compare costs and royalty fees 2. historical franchisee performance/satisfaction

what are 3 disadvantages of buying a franchise and becoming a franchisee

1. cost a lot of money 2. royalty fees cut into profits 3. less freedom to make decisions

advertising fees

fees paid to support television, magazine, or other advertising of the franchise as a whole

what are 4 ways entrepreneurs can go into a business for themselves

1. purchase an existing business 2. enter unto a family business 3. but a franchise 4. start a brand new business from scratch

what costs are usually considered start-up costs

1. rent 2. equipment 3. inventory

what are 3 advantages of buying a franchise and becoming a franchisee

1. well-known brand awareness 2. cost savings on equipment/supplies 3. consistency guaranteed by all franchisees

franchise

a _________ gives the individual the right to market a company's products or services in a particular area.

define business broker

a professional who earns their living selling businesses of others

franchisee

individual who purchases the rights to use the company's trademarked name, use the established business model to do business, and market the company's products or services in a particular way

franchisor

owns the overall rights and trademarks of the company and allows its franchisees to use these rights and trademarks to do business

initial franchise fee

the fee the franchise owner pays in return for the right to run the franchise

royalty fees

weekly or monthly payments made by the owner of the franchise to the seller of the franchise