ENT 396 CH.7
When should a potential franchisee receive the FDD (Franchise Disclosure Document)?
at least ten days before signing a contract or paying any money
Franchisees have the option of using the logo and symbols of the franchisor.
False
The Federal Trade Commission does not provide information on franchise success
False
A key question to ask when buying an on-going small business is which of the following?
How many personnel are going to remain?
Which is not a key question to ask when buying a business?
Is the building heated with gas or electricity?
Who must negotiate a final deal to purchase a business?
The potential buyer
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
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
The Franchise Disclosure Document (FDD) is a legally required disclosure document that must be presented to potential franchisees during presale discussions
True
The elimination of time and effort associated with starting a company is an advantage of acquiring an ongoing venture
True
The prospective investor should get 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
Uniqueness in a product or service can be demonstrated through a new-new approach or a new-old approach
True
When purchasing an existing business, the prospective owner should conduct an assessment of the business's current group of employees
True
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
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
When one designs a unique good or service, the individual is said to have used a(n) ____approach to starting the business.
new-new
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.
The inventory should be examined for which of the following?
salability correspondence between the physical count and the book count up-to-datedness
The advantages of franchising include:
training and guidance. brand-name appeal. proven track record.
