ENTR Chapter 7

46. The FDD contains how many categories?

23

71. When is the buyer likely to have power over the seller in the negotiation to purchase a business?

if the seller has already purchased another business

27. Which of the following is an intangible asset?

reputation

30. When buying a business, what is not a factor to consider when investigating the competition?

number of employees

35. What is not a factor when looking at the condition of the inventory?

suppliers

24. A new business faces two great dangers: the possibility that it will not find a market for its goods or services, and ____.

the chance that it will not be able to control its costs

52. Which of the following is not considered by entrepreneurs when examining opportunities for possible ventures?

the cost of replacing an employee

29. After the prospective entrepreneur has gathered all of the necessary information, it is up to ____ to make the final decision on the matter.

the legal advisors

72. When does a business have to increase its sales annually to net as much as it did in the previous year?

when profits are not rising as fast as sales

66. What is the largest source for new business ideas among men and women?

prior job

62. Which is not a start-up expense?

depreciation

34. Business-related reasons for selling do not include which of the following?

Changes in the product supply chain.

36. 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

50. Starting a business by adapting something already on the market is called __________.

a new-old approach

55. The extra value a business can command in a sale is known as

goodwill.

48. Which of the following costs add to the cost of franchising pertaining to principal and interest payments?

debt services

42. The advantages of franchising does not include

franchise fees.

26. 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?

56. Competitor factors in a buying decision do not include

age of the competition's owners.

54. Business-related reasons for selling may include all of the following except

changes in location.

38. The individual who buys the franchise is the

franchisee.

63. Which is not a key question to ask when buying a business?

Is the building heated with gas or electricity?

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

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

65. Which of the following is not currently cited as a trend creating business opportunities?

breakfast cereals

32. A franchise is any arrangement where the owner has licensed others to sell goods or services by which of the following?

trademark

39. A franchise system can be used for handling

inventory.

23. A(n) ____ approach indicates the importance of people's awareness of their daily lives for developing new business ideas.

new-new

64. The _____ approach indicates the importance of people's awareness of their daily lives for developing new business ideas.

new-new

45. Evaluating franchise opportunities include finding out more about all of the following except

the franchise location.

70. Who must negotiate a final deal to purchase a business?

the potential buyer

44. All of the following should be examined when evaluating the selection of venture except

employees.

58. The franchisor's responsibility does not include providing

business relationship.

61. The final decision to purchase a franchise should be up to

you.

33. An agreement not to compete is also known as

a legal restraint of trade.

53. When this asset is purchased, the buyer should be sure to deduct those that they are deemed uncollectible.

accounts receivable

69. An analysis of the competition should look for ______.

unscrupulous practices

41. The franchisee's responsibilities does not include

designing the product specifics.

37. 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

57. The individual who arranges for a dealer to handle a specific product or service under certain mutually agreed upon conditions is known as the _____.

franchisor

25. "Piggybacking" one's way into a new business involves using a ____approach

new-old

67. What is not considered an emerging Internet opportunity?

niche consumables

68. What is an often overlooked asset when acquiring a new business?

records

43. The person who sells the franchise is usually required to do all of the following except:

pay a fee.

28. What is not an advantage to buying a franchise business?

structured fees

60. Which of the following costs do not add to the cost of franchising?

prepaid utility bills

31. Which of the following is a question that should not be sidestepped when buying a business?

Are there hidden problems that exist in the operation?

40. The person who gets the franchise is usually required to do all of the following except:

design a logo for the unit.

49. Coming up with a unique good or service is a _____ approach, while adapting something that is currently on the market or extending the offering to an area where it is not presently available is a(n) _____ approach.

new-new, new-old

51. When buying a small business you need to know all of the following items except

the owner's family stability and relationships.

59. Which of the following is not a disadvantage of a major franchise?

track record of the franchisor