BSAD CH5

Which of the following is a definition of "franchise"? a. A franchise is a license to operate an individually owned business as if it were part of a chain of outlets or stores. b. A franchise is an agreement between two parties to carry on business for profit. c. A franchise is a large business that permits small businesses license to operate as if it were part of the larger business. d. A franchise is a license to operate a unit of a business as if it were part of a chain of outlets or stores.

A franchise is a license to operate an individually owned business as if it were part of a chain of outlets or stores.

____________ is a new alternative to traditional financing that uses online sites to invite people to contribute. a. Selling life insurance policies to companies who become the policy beneficiaries b. Angel investing c. Credit cards d. Crowdfunding

Crowdfunding

________ franchises occur when two franchisors offer their products together; this is becoming a new small-business trend. a. Dual-branded b. Twin c. Matching d. Partnering

Dual-branded

Which of the following is NOT an advantage of smallness in business? a. Ability to adapt to change b. Simplified record keeping c. Easy to raise capital d. Independence e. Personal relationships with customers and employees

Easy to raise capital

The government agency that advises and assists small businesses by providing management and financial assistance including counseling on improving operations and assisting with obtaining debt financing is known as the _____. a. Small Business Administration (SBA) b. Better Business Bureau (BBB) c. small-business development centers (SBDCs) d. Service Corps of Retired Executives (SCORE)

Small Business Administration (SBA)

Every business must keep records of sales, profits and losses, fixed assets, contacts, tax returns, customers, and a variety of other information that affects the growth and operability of the business. Which of the following is true about small business? a. Many small firms need only a simple set of records. b. Record keeping for small firms requires greater exactness than large firms because even minute mistakes can throw the business into financial straits. c. Record keeping for large firms requires greater exactness than small firms because minute mistakes can have a cascading effect and cause the destruction of multiple business enterprises. d. Record keeping does not vary much between large and small firms.

Many small firms need only a simple set of records.

Basic rights and obligations are delineated in a franchise agreement. Which of the following is a franchising obligation? a. Follow guidelines established by the franchisor regarding exclusive territorial rights b. Use of the franchisor's copyrighted materials c. Rights to obtain supplies from nominated suppliers at special prices d. Requirement to purchase goods or products from the franchisor

Requirement to purchase goods or products from the franchisor

Luis Fisher, a recently retired corporate executive, is becoming restless in his new role and would like to make this transition smoother by participating in the business community in some limited manner. Since Luis is financially secure and primarily interested in some sort of volunteer work, he should consider becoming involved with which of the following SBA programs? a. SBIC b. ACE c. SBDC d. SCORE e. SBI

SCORE

The growth of women and minorities in franchising is attributable to which of the following activities? a. Banks having loan programs targeted at women and minority business owners b. More women and minorities graduating from business college c. Women and minorities having a greater work ethic than nonminority males d. Special outreach programs designed to encourage franchisee diversity

Special outreach programs designed to encourage franchisee diversity

What is meant by dual-branded franchises? a. One product carries different brand logos in two different locations b. Two franchisors offer their products together c. Two franchisees interchange brands d. One franchisor offers its products to two different franchisees

Two franchisors offer their products together

Franchising allows a _____ the opportunity to set up a small business relatively quickly, and because of its association with an established brand, a _____ outlet often reaches the break-even point faster than an independent business would. a. franchise; franchisee b. franchisor; franchisee c. franchisor; franchise d. franchisee; franchisor e. franchisee; franchise

franchisee; franchise

The average length of an SBA loan is about twenty-five years. a. True b. False

false

A person who buys a franchise is known as the: a. seller. b. franchisee. c. franchise. d. franchisor. e. agent.

franchisee.

Knowledgeable entrepreneurs choose areas with which they are familiar. These are most often the more established industries that require only a ___________ investment and some special ______________

low initial; skills or knowledge

A franchisee acquires rights to all of the following, except: a. methods of operation of the business. b. a name. c. national advertising by the franchise. d. a logo. e. other franchisee's employees and management.

other franchisee's employees and management.

Which of the following is an accurate statement about business profitability? a. According to the SBA, the most profitable companies in the United States are small firms that have been in business for more than ten years and employ fewer than 20 people. b. According to the SBA, small businesses can retain all profits and have low costs associated with their operations which contributes to their profitability. c. Large businesses and small businesses are about equal in their profitability. d. Large businesses are more profitable than small business and this increases with the number of employees hired

According to the SBA, the most profitable companies in the United States are small firms that have been in business for more than ten years and employ fewer than 20 people.

The Small Business Administration (SBA) defines a small business as "one which is independently owned and operated for profit and is not dominant in its field." How small must a firm be to not dominate its field? a. By the SBA's definition, a "small" business must have profits of no more than $250,000 per year. b. By the SBA's definition, a "small" business must have no more than 50 employees and have average annual sales of not more than $1.7 million. c. By the SBA's definition, the factors that determine the size of a business depend on a number of factors including the average annual growth of the business. d. By the SBA's definition, the factors that determine the size of a business depend on the particular industry it is in.

By the SBA's definition, the factors that determine the size of a business depend on the particular industry it is in.

What are the three key ingredients in small business survival as well as failure? a. Human resource development, record keeping, and planning b. Marketing, financing, and planning c. Capital, management, and planning d. Planning, record keeping, and marketing

Capital, management, and planning

Which category of industries includes retailing, wholesaling, transportation, and communications—industries concerned with the movement of goods from producers to consumers?

Distribution

Which of the following is the most likely reason that a small-business owner may become frustrated as a franchisee? a. Excessive restrictions resulting in less freedom b. Reduced stress and responsibility c. Management training and support d. Site selection e. Creating and managing national advertising

Excessive restrictions resulting in less freedom

Which statement best describes the general success rate for franchises? a. Franchises, like other small businesses, have a very high rate of failure. b. Franchises have a very high success rate compared to other small businesses. c. Franchises are slightly more successful overall than other types of businesses. d. Obtaining a franchise is a guarantee for a successful business. e. Franchises have about a 50 percent chance of being successful.

Franchises have a very high success rate compared to other small businesses.

What percentage of home-based businesses have no employees? a. Under 30% b. Over 70% c. Under 50% d. Over 90%

Over 90%

Which of the following is considered a shortcoming of owning a franchise? a. Possible market saturation b. National and local advertising programs c. Centralized buying power d. Guidance and advice from the franchisor

Possible market saturation

_____ are business clinics, usually located on college campuses that provide free counseling and training for owners of small businesses. a. Small-business development centers (SBDCs) b. Small-business investment companies (SBICs) c. Self-employment assistance (SEA) d. Service Corps of Retired Executives (SCORE) e. Better Business Bureau (BBB

Small-business development centers (SBDCs)

Which of the following is a way in which the Small Business Administration provides financial assistance to small businesses? a. Self-employment assistance (SEA) b. Service Corps of Retired Executives (SCORE) c. Better Business Bureau (BBB) d. Small-business investment companies (SBICs) e. Small-business development centers (SBDCs)

Small-business investment companies (SBICs)

A small business is all of the following except a. demanding of the owner's time and attention. b. independently owned. c. difficult to manage. d. operated for profit. e. dominant in its field.

dominant in its field.

John had a good idea for a candy manufacturing business. He decided that he wanted to take the risk, become an entrepreneur, and start his own business. Now, ten years later, John's candy company has 20 locations all over the United States and employs nearly 1,000 people. This example illustrates:

how small business fuels job creation and innovation.

According to the U.S. Office of Management and Budget, __________ of the major technological advances of the 20th century originated with individual inventors and small companies. a. less than 10% b. more than half c. nearly all d. about one-fourth

more than half

______ are independently owned and operated, not dominant in their field of operation, and meet certain standards of size in regard to number of employees or average annual sales.

small business

In the United States, it typically takes ____ and about $600 to establish a business as a legal entity. a. ​a month and a day b. ​less than a week c. ​about a month d. ​two weeks

​less than a week

In the early days of computers, programmers and designers started businesses in their parents' garages and worked there until they were able to sell enough of their products to move into a location of their own. Anahi and Joelle started a small software and computer hardware. They have filed for a patent on their latest invention and are working on two others. Which of the following statements is correct regarding small business and technical innovation?

Small firms produce two-and-a-half times as many innovations as large firms relative to the number of persons employed.

Franchising agreements fall into three general categories, which of the following is not one of those categories? a. A franchisor supplies brand names, techniques, or other services instead of a complete product. b. A manufacturer franchises retail stores to sell its products. c. A producer licenses distributors to sell a given product to retailers. d. A distributor franchises the channels of distribution to franchisees.

A distributor franchises the channels of distribution to franchisees.

Franchises offer people starting a business the advantage of a recognized name, management assistance, and a. a lot of regulations. b. large territories without competition. c. no royalties or fees. d. a greater chance for success. e. discounted fees.

a greater chance for success.

All of the following are factors that encourage certain people to start new businesses, except: a. a desire to determine one's own destiny. b. a willingness to find and accept a challenge. c. a family member(s) who has had been in business. d. independence. e. a reclusive nature.

a reclusive nature.