Question 1

As described in the Opening Profile to Chapter 8, the key to being successful when operating a franchise is to be careful about asking for too much from the franchisor.

Accepted Answer

The Opening Profile to Chapter 8 states that the key to being successful when operating a franchise is to be careful about asking for too much from the franchisor.

Question 2

The right of license granted by a company to an individual or group to market its products or services in a specific territory is known as franchising.

Accepted Answer

Franchising is a business model where a company (franchisor) grants an individual or group (franchisee) the rights to operate a business using its brand, products, and operational model in a specific area.

Question 3

According to the insert written by Marc Diener, To Be a Better Negotiator, Learn to Tell the Difference between a Lie and a Lie. Pretending to bend over backward to make meaningless concessions is not lying. It's __________.

Accepted Answer

Pretending to make concessions is a tactic used in negotiation to influence the other party's perception, which aligns with applied psychology.

Question 4

By definition, the franchisee is a person or corporation that offers a franchise.

Accepted Answer

A franchisee is a person or corporation that purchases the right to operate a business under the franchisor's brand and system.

Question 5

According to the insert written by by Marc Diener, To Be a Better Negotiator, Learn to Tell the Difference between a Lie and a Lie. Declaring your bottom line to be nonnegotiable (even when you're posturing) is not lying. It's __________.

Accepted Answer

Declaring your bottom line as nonnegotiable is considered a show of strength, as it is a negotiation tactic to assert firmness and confidence in one's position.

Question 6

Marc Diener wrote and article dealing with negotiation ethics. The article was included in the end of this chapter. Diener explained "To Be a Better Negotiator, Learn to Tell the Difference between a Lie and a Lie"- what did he mean?

Accepted Answer

The answer of Marc Diener wrote and article dealing with...

Question 7

Access to management expertise and training is an important advantage to buying a franchise for an entrepreneur, particularly if they do not have experience in the industry.

Accepted Answer

Franchises often provide training and support to franchisees, which is beneficial for those lacking industry experience.

Question 8

Buying a franchise may or may not reduce the amount of capital needed by the entrepreneur for the business to be successful; this will depend on what services are received for the price paid.

Accepted Answer

The capital required can vary based on the franchise agreement, which may include support services that reduce initial costs.

Question 9

If the assistance in start-up is not good, the entrepreneur should probably look elsewhere for opportunities unless he or she already has extensive experience in the field.

Accepted Answer

If the assistance in a start-up is inadequate, it may hinder the entrepreneur's success unless they have enough experience to navigate challenges independently.

Question 10

Most franchise agreements are written with the interests of both franchisee and franchisor in mind, otherwise, they would have difficulty getting franchisees to sign them.

Accepted Answer

The answer of Most franchise agreements are written with the...

Question 11

When it comes to expansion of a franchise network, the right of first refusal given to existing franchisees is an important concession which prevents over-saturation of a market.

Accepted Answer

The answer of When it comes to expansion of a...

Question 12

Franchising opportunities have often evolved from changes in the environment as well as important social trends.

Accepted Answer

Franchising opportunities often arise from adapting to environmental changes and social trends, allowing businesses to meet new consumer demands and preferences.

Question 13

A leveraged buyout (LBO) occurs when an entrepreneur (or any employee group) uses borrowed funds to purchase an existing venture for cash. How does the entrepreneur determine whether a specific company is a good candidate for an LBO?

Accepted Answer

The answer of A leveraged buyout (LBO) occurs when an...

Question 14

An unproven franchise can be a better investment for an entrepreneur because it offers lower risk and capital requirements.

Accepted Answer

An unproven franchise typically carries higher risk due to lack of established brand recognition and market presence, and may not necessarily have lower capital requirements.

Question 15

The financial stability of the franchisor is important to the franchisee because it directly affects availability of the services that franchises are paying for and expect as a benefit of belonging to the system.

Accepted Answer

The financial stability of the franchisor ensures that they can provide ongoing support, services, and resources that franchisees rely on to operate successfully.

Question 16

Discuss how an entrepreneur should evaluate the purchase of an existing business.

Accepted Answer

The answer of Discuss how an entrepreneur should evaluate the...

Question 17

An entrepreneur buying an existing business is called a joint venture, because two companies are coming together to form one.

Accepted Answer

A joint venture involves two or more parties collaborating on a specific project or business activity, whereas buying an existing business is an acquisition, not a joint venture.

Question 18

When considering an acquisition, an entrepreneur should only be concerned about the price, as everything else about the business will be changed once they take over.

Accepted Answer

An entrepreneur should consider various factors such as company culture, existing contracts, customer base, and operational processes, as these elements can significantly impact the success of the acquisition and may not be easily changed.

Question 19

In the process of acquiring an existing business determining a fair price is often complicated by the lack of financial records and accounting practices of small businesses.

Accepted Answer

Small businesses often have inconsistent or incomplete financial records, making it challenging to assess their true financial health and determine a fair acquisition price.

Question 20

When entrepreneurs say they are looking for a good business to buy, what they really mean is they are looking for an undervalued asset.

Accepted Answer

Entrepreneurs are looking for businesses that are undervalued, meaning they can be purchased for less than their fair market value. This allows them to make a profit by selling the business for more than they paid for it.

Quiz 8: The Marketing Plan