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Study Resources (Business Management)

    81) If a franchisor encourages you to sign without reading the agreement, or discourages you from "spending the money on an attorney," this is a warning sign that the franchiser might be dishonest.   82) By the 1920s, franchising was rife with fraudulent practitioners .   83) According to the Trade Regulation Rule, every.
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    11) In view of the cause of most new business failures, probably the most valuable service provided franchisees by the franchiser is: A) management training and experience. B) national advertising. C) financial assistance. D) territorial protection. 12) Pure franchising is also referred to as: A) trade name franchising. B) business format franchising. C) product distribution franchising. D) all of.
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    71) By signing the franchise contract, a franchisee typically surrenders some freedom and autonomy in operating his/her business. 72) The only fee that franchisers can collect from franchisees is a one-time franchise fee paid at the outset of the relationship.   73) In addition to other fees, franchisees must also pay royalties but.
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    61) Entrepreneurs who want to pass their businesses on to their children should consider forming a: A) Sale of Controlling Interest. B) Family Limited Partnership. C) Family Limited Liability Corporation. D) None of the above   62) A(n) ________ is a form of employee benefit plan in which a trust created for employees purchases their employers'.
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    41) When franchise contracts are renewed: A) the existing contract is merely annotated and signed by both parties. B) a new UFOC must be issued. C) all terms of the previous contract may be renegotiated. D) a new contract must be drawn up by the two parties. 42) The franchiser has the right to cancel.
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    61) Which financial forecast should be realistic? A) Pessimistic B) Most Likely C) Optimistic D) All of the above   62) Competitor's Analysis should identify: A) Who are the company's key competitors? B) What are their strategies? C) What images do they have in the marketplace? D) All of the above   63) One effective documentation technique involves ________, in.
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    71) An important advantage of buying an existing business is the greater likelihood that it will continue to survive and thrive in the marketplace.   72) With an existing business, the new owner can depend on employees to help him/her make money while he/she is learning the business.   73) For a new owner.
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    21) The first, second and third growth wave in franchising respectively, are: A) low-cost franchises that focus on niche markets; shift to service sector; fast-food restaurant using the concept of rapid growth. B) fast-food restaurant using the concept of rapid growth; shift to service sector; low-cost franchises that focus on niche markets. C).
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    31) A valuation method that is more realistic than the balance sheet because it adjusts book value to reflect actual market value is the: A) excess-earnings method. B) market approach. C) capitalization method. D) adjusted balance sheet method.   32) Which of the following valuation methods does not consider the future income-earning potential of a business? A).
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    21) Discussion of profitability and anticipated profitability of firms in the market segment, along with the entry, exit, and merger of those firms, is all part of the ________ section of the business plan. A) business strategy B) company history C) business and industry profile D) marketing strategy 22) In the business strategy of the.
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    21) A significant disadvantage of a partnership is: A) the unlimited personal liability for all partners. B) the inability to attract either additional capital or new partners due to the complexity of rewriting the agreement. C) the difficulty of disposing a partnership interest without dissolving the partnership. D) the regulatory complexity under which a.
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    41) Any assets pledged to the bank as security for repayment of the loan are the ________ of the five Cs. A) collateral B) capacity C) capital D) conditions   42) The intangible C that lenders examine in evaluating the business plan is that of: A) capital. B) character. C) collateral. D) capacity.   43) The C of the five Cs that.
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  114) What is the Franchise Disclosure Document? Offer several examples of what type of information is required in the FDD.   115) What clues should you look for that should arouse your suspicions regarding the honesty and legitimacy of a franchise? Identify at least eight.   116) Outline the process of buying a franchise.
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  128) What guidelines should be kept in mind when deciding how to value a company?   129) How does one value a company using the balance sheet method? Why would an entrepreneur choose this method of valuation? 130) Describe the earnings approach for valuing a company, outlining the calculation and the strengths and.
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    41) An S-corporation form of ownership overcomes which disadvantage of the regular or "C" corporation form of ownership? A) The double taxation issue B) The expense and difficulty of formation C) The amount of regulation and red tape involved in its operation D) The potential loss of control by the founder 42) An owner should.
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    31) The plan of operation of the company within the business plan should detail: A) the experience of the management team. B) the production process for the product being sold. C) the financial assets of each of the officers. D) plans for keeping the important officers in place with the company.   32) When creating financial.
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    21) Before buying an existing business, the buyer should analyze two external elements of the business: A) its capital and market potential. B) its customer characteristics and direct competitors. C) its intangible assets and financial status. D) the market potential of the products and the existing inventory.   22) Which of the following is a criterion.
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    31) The "Das Spelunker" corporation, formed in Germany and conducting business in the United States, is considered to be a(n) ________ corporation. A) alien B) domestic C) foreign D) local   32) Acme Corporation is chartered in Delaware, but its primary area of operation is in South Carolina. In South Carolina, Acme would be considered a(n).
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    111) A benefit is a descriptive fact about a product or service.   112) Business prototyping recognizes that every business idea is a hypothesis that needs to be tested before an entrepreneur takes it to full scale 113) Lenders and investors look for the experience, qualifications and age of the people who will.
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    91) The focus of the "competitor analysis" section of the business plan should be demonstrating how the company has an advantage over its competitors.   92) The business plan needs to address, in the management section, how important officers will be encouraged to remain with the company.   93) Essential pieces of information for.
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    1) When buying an existing business, the potential buyer should remember that: A) it is a long process and the buyer should be patient. B) existing businesses often do not continue to be successful after a change in ownership. C) it is often more difficult to find capital for an existing business than.
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    11) The process of gathering information about the company, valuing the company, and performing a detailed review of all records, agreements, and compliance is called: A) a letter of intent. B) nondisclosure. C) valuation. D) due diligence.   12) When negotiating the deal, the most important thing to remember is: A) terms are more important than the.
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    101) A master franchise is called a piggyback franchise. 102) Typically, because the franchisor's attorney prepares franchise contracts, the provision favors the franchisee.   103) The Federal Trade Commission (FTC) enacted the Trade Regulation Rule, requiring all franchisors to disclose detailed information on their operations at the first personal meeting or at least.
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    11) A business plan: A) reduces the risk and uncertainty involved in starting a new company. B) is a guarantee of success for the small company. C) should be done by professional writers in consultation with the owner. D) should be kept in outline form to avoid over structuring the company.   12) The ________ is.
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    1) In franchising, ________ pay fees and royalties to a ________ in return for the right to sell its products or services under the franchiser's trade name and often to use its business format and system. A) franchiser; franchisee B) franchisee; franchiser C) franchise; business owner D) business owner; parent company   2) Franchising is currently.
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    91) Franchisors are obligated to renew a franchisee's contract unless there has been malfeasance on the part of the franchise.   92) In most cases, a franchisee does not have to get the franchisor's approval to sell the franchise to a third party.   93) Franchising, as a method of conducting business, has declined.
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    81) Business strategy outlines how the owner plans to achieve business objectives in the face of a competitive environment.   82) A feature is what a customer gains from a product.. 83) The executive summary should be written first and should be a broad general discussion of the business plan.   84) The "competitor.
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    51) There are three components in the rate of return used to value a business. The component(s) are: A) risk-free return. B) an inflation premium. C) the risk allowance for investing in the particular business. D) All of the above   52) Using the discounted future earnings approach, the buyer estimates: A) the company's net income for.
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    51) ________ partners are not active in a business but generally are known to be members of the partnership. A) Dormant B) General C) Silent D) Limited   52) ________ corporations have shares that are controlled by a relatively small number of people - family members, relatives, or friends. A) Closely held B) Domestic C) Foreign D) Alien   53).
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  122) Why does the entrepreneur need to develop a business plan? What functions does it fulfill?   123) Outline the elements of the feasibility plan with a one to two sentence explanation of each element. 124) What are the components of a successful business plan?   125) What should be included in the section on.
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    101) Neither the balance sheet method nor the adjusted balance sheet method of valuing a business considers the future earning power of the business.   102) In the excess earnings approach to business valuation, the earnings of comparable companies are needed to set the valuation of the company.   103) One advantage of the.
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    71) An executive summary highlights the critical aspects of the plan.   72) Investors read business plans in such detail that the executive summary is nice to have but it is optional.   73) The ideal business plan should be at least 100 pages long and somewhat hard to read in order to demonstrate.
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    61) The complementary skills refers to: A) the sole proprietorship skills. B) partner's skills that complement one another. C) complementary skills offered by the employees. D) None of the above 62) Which type of ownership is not subject to federal taxation? A) Sole Proprietorship B) Corporations C) Partnership D) Limited Liability Corporation   63) Corporations that.
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    61) As with most franchises, the key to McDonald's success is the standardization of their product, processes, etc.   62) McDonald's relies almost exclusively on the trade name type of franchising.   63) When a franchisee buys a franchise, he/she is purchasing the expertise and the business experience of the franchisor.   64) The basic and.
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  110) Franchising is an important part of the U.S. economy. Briefly explain its importance, define franchising, and identify the three basic types of franchises.   111) Explain the benefits of franchising to the franchisee. 112) Although franchising is the fastest growing segment of small business, it has drawbacks. Name and explain at least.
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    51) What franchisee turnover rate is probably sound? A) Less than 5 percent B) Less than 15 percent C) Less than 25 percent D) Less than 35 percent   52) The ________ requires all franchisers to disclose detailed information on their operations at the first personal meeting or at least fourteen days before a franchise contract.
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    51) An executive summary should be: A) a snapshot of the entire plan. B) 3 to 5 pages. C) written first. D) All of the above   52) The phrase, "avoid the off-the-shelf, 'cookie-cutter' approach that produces look-alike plans" means: A) avoiding a business plan that looks ordinary. B) that every business plan is unique. C) the business plan.
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    101) The reality test of a business plan is the explanation of how much of a return is expected, and when investors can expect it.   102) The business plan presentation should be slow, methodical, and detailed to show the depth of understanding and preparation the entrepreneur has gone to.   103) Regardless of.
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    1) For entrepreneurs, a business plan is: A) a systematic, realistic evaluation of a venture's chances for success in the market. B) a way to determine the principal risks facing the venture. C) a game plan for managing the business successfully. D) All the above   2) A business plan performs a number of functions including: A).
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    31) To protect investors from unscrupulous franchisers, the regulatory body is the: A) FCC. B) Justice Department. C) FDA. D) FTC.   32) The Uniform Franchise Offering Circular is now called the: A) FTC. B) FDD C) UFOC. D) FOC   33) The FTC's philosophy focuses on: A) catching and prosecuting abusers of franchise laws. B) verifying the accuracy of FDD information. C) providing information.
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