Question 1

As part of the valuation process,a buyer should scrutinize the seller's balance sheet to see whether asset book values are realistic.

Accepted Answer

A) True 
 B)False

Question 2

Most franchise experts recommend that the FDD be examined carefully by

Accepted Answer

A) regulators that specialize in such documents. 
B) a franchise attorney and an accountant. 
C) everyone associated with the potential startup. 
D) suppliers that may be used if the startup is successful. 
A) regulators that specialize in such documents. 
B) a franchise attorney and an accountant. 
C) everyone associated with the potential startup. 
D) suppliers that may be used if the startup is successful.

Question 3

Jasper is evaluating a business for possible purchase.He needs to know what a fair offering price should be.One way to do this would be:

Accepted Answer

A) to ask a business broker for his appraisal. 
B) to search the Internet for information about this business. 
C) to appraise the value of the assets of this business. 
D) to base his offer on the owner's equity on the balance sheet. 
A) to ask a business broker for his appraisal. 
B) to search the Internet for information about this business. 
C) to appraise the value of the assets of this business. 
D) to base his offer on the owner's equity on the balance sheet.

Question 4

One of the advantages of buying a franchise is that the purchaser has access to a proven business system.

Accepted Answer

A) True 
 B)False

Question 5

As of 2008,the Federal Trade Commission's Franchise Rule prescribes that franchisors must disclose to prospective franchisees information such as bankruptcies,business experience of the principals,and litigation in which the firm is involved.

Accepted Answer

A) True 
 B)False

Question 6

Define the terms franchising,franchisor,and franchisee.Apply to McDonald's or another franchise example.

Accepted Answer

∙
Franchising: a method of distributing

Question 7

Conducting a thorough due diligence should always be accomplished if purchasing an existing corporation or franchise,but is unnecessary if acquiring a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 8

Bart is meeting with a representative of GHI,a franchisor.He has received information about the franchisor's finances,experience,size,and involvement in litigation.Bart has been given:

Accepted Answer

A) a master license. 
B) a non-disclosure statement. 
C) a franchise rule. 
D) a franchise disclosure document. 
A) a master license. 
B) a non-disclosure statement. 
C) a franchise rule. 
D) a franchise disclosure document.

Question 9

Nardell has operated a successful franchise for a few years and would now like to open another similar business under his own brand.The contract Nardell signed prohibits him from doing so.The contract contains:

Accepted Answer

A) a non-compete clause. 
B) a co-branding clause. 
C) a piggyback franchise provision. 
D) an area development provision. 
A) a non-compete clause. 
B) a co-branding clause. 
C) a piggyback franchise provision. 
D) an area development provision.

Question 10

When evaluating the financial data of a 10-year-old business that is being considered for purchase,which issue will be of least concern?

Accepted Answer

A) Understated income in an effort to minimize taxes 
B) Unrealistically reduced levels of advertising cost 
C) Business expenses related to personal use of vehicles 
D) Not having the books for Years 1-5 due to a fire 
A) Understated income in an effort to minimize taxes 
B) Unrealistically reduced levels of advertising cost 
C) Business expenses related to personal use of vehicles 
D) Not having the books for Years 1-5 due to a fire

Question 11

Match:
a.due diligence
b.fair market value
c.franchise
d.franchise contract
e.Franchise Disclosure Document
f.Franchise Rule
g.franchisee
h.franchisor
-Specialized brokers that bring together buyers and sellers of businesses

Accepted Answer

The answer of Match:
a.due diligence
b.fair market value
c.franchise
d.franchise contract
e.Franchise Disclosure Document
f.Franchise...

Question 12

RST,Inc. ,a franchisor,is requiring its franchisee,Raymond,to make significant changes to the equipment and interior appearance of his business as a condition of renewing the contract.RST claims this is necessary because:

Accepted Answer

A) RST has changed its marketing plan and Raymond's store did not keep up with the changes. 
B) Raymond's contract has a lower royalty fee than current contracts. 
C) sales from Raymond's franchise are lower than those in newer facilities. 
D) Raymond's customers have complained about the appearance of his facility. 
A) RST has changed its marketing plan and Raymond's store did not keep up with the changes. 
B) Raymond's contract has a lower royalty fee than current contracts. 
C) sales from Raymond's franchise are lower than those in newer facilities. 
D) Raymond's customers have complained about the appearance of his facility.

Question 13

The purchase price of a business is determined by negotiation between

Accepted Answer

A) lender and seller. 
B) seller and broker. 
C) buyer and seller. 
D) lender and buyer. 
A) lender and seller. 
B) seller and broker. 
C) buyer and seller. 
D) lender and buyer.

Question 14

Match:
a.due diligence
b.fair market value
c.franchise
d.franchise contract
e.Franchise Disclosure Document
f.Franchise Rule
g.franchisee
h.franchisor
-Individuals or firms that obtain the legal right to open several franchised outlets in a given area

Accepted Answer

The answer of Match:
a.due diligence
b.fair market value
c.franchise
d.franchise contract
e.Franchise Disclosure Document
f.Franchise...

Question 15

Imelda reports only half the cash from the vending machines on her cash flow statement and income tax returns.Her purpose in doing so is:

Accepted Answer

A) to reduce her income tax liability. 
B) to increase her net income on the financial statement. 
C) to retain the cash for reinvestment in the business. 
D) to make the business more attractive to a buyer. 
A) to reduce her income tax liability. 
B) to increase her net income on the financial statement. 
C) to retain the cash for reinvestment in the business. 
D) to make the business more attractive to a buyer.

As part of the valuation process,a buyer should scrutinize the seller's balance sheet to see whether asset book values are realistic.

Most franchise experts recommend that the FDD be examined carefully by

Jasper is evaluating a business for possible purchase.He needs to know what a fair offering price should be.One way to do this would be:

One of the advantages of buying a franchise is that the purchaser has access to a proven business system.

As of 2008,the Federal Trade Commission's Franchise Rule prescribes that franchisors must disclose to prospective franchisees information such as bankruptcies,business experience of the principals,and litigation in which the firm is involved.

Define the terms franchising,franchisor,and franchisee.Apply to McDonald's or another franchise example.

Conducting a thorough due diligence should always be accomplished if purchasing an existing corporation or franchise,but is unnecessary if acquiring a sole proprietorship.

Bart is meeting with a representative of GHI,a franchisor.He has received information about the franchisor's finances,experience,size,and involvement in litigation.Bart has been given:

Nardell has operated a successful franchise for a few years and would now like to open another similar business under his own brand.The contract Nardell signed prohibits him from doing so.The contract contains:

When evaluating the financial data of a 10-year-old business that is being considered for purchase,which issue will be of least concern?

Match: a.due diligence b.fair market value c.franchise d.franchise contract e.Franchise Disclosure Document f.Franchise Rule g.franchisee h.franchisor -Specialized brokers that bring together buyers and sellers of businesses

RST,Inc. ,a franchisor,is requiring its franchisee,Raymond,to make significant changes to the equipment and interior appearance of his business as a condition of renewing the contract.RST claims this is necessary because:

The purchase price of a business is determined by negotiation between

Match: a.due diligence b.fair market value c.franchise d.franchise contract e.Franchise Disclosure Document f.Franchise Rule g.franchisee h.franchisor -Individuals or firms that obtain the legal right to open several franchised outlets in a given area

Imelda reports only half the cash from the vending machines on her cash flow statement and income tax returns.Her purpose in doing so is:

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, ethics, and Social Entrepreneurship

Starting a Small Business

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, legal Structures, alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Business

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firms Assets

Managing Risk

Filters

Exam 4: Franchises and Buyouts

As part of the valuation process,a buyer should scrutinize the seller's balance sheet to see whether asset book values are realistic.

Most franchise experts recommend that the FDD be examined carefully by

Jasper is evaluating a business for possible purchase.He needs to know what a fair offering price should be.One way to do this would be:

One of the advantages of buying a franchise is that the purchaser has access to a proven business system.

As of 2008,the Federal Trade Commission's Franchise Rule prescribes that franchisors must disclose to prospective franchisees information such as bankruptcies,business experience of the principals,and litigation in which the firm is involved.

Define the terms franchising,franchisor,and franchisee.Apply to McDonald's or another franchise example.

Conducting a thorough due diligence should always be accomplished if purchasing an existing corporation or franchise,but is unnecessary if acquiring a sole proprietorship.

Bart is meeting with a representative of GHI,a franchisor.He has received information about the franchisor's finances,experience,size,and involvement in litigation.Bart has been given:

Nardell has operated a successful franchise for a few years and would now like to open another similar business under his own brand.The contract Nardell signed prohibits him from doing so.The contract contains:

When evaluating the financial data of a 10-year-old business that is being considered for purchase,which issue will be of least concern?

Match: a.due diligence b.fair market value c.franchise d.franchise contract e.Franchise Disclosure Document f.Franchise Rule g.franchisee h.franchisor -Specialized brokers that bring together buyers and sellers of businesses

RST,Inc. ,a franchisor,is requiring its franchisee,Raymond,to make significant changes to the equipment and interior appearance of his business as a condition of renewing the contract.RST claims this is necessary because:

The purchase price of a business is determined by negotiation between

Match: a.due diligence b.fair market value c.franchise d.franchise contract e.Franchise Disclosure Document f.Franchise Rule g.franchisee h.franchisor -Individuals or firms that obtain the legal right to open several franchised outlets in a given area

Imelda reports only half the cash from the vending machines on her cash flow statement and income tax returns.Her purpose in doing so is:

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, ethics, and Social Entrepreneurship

Starting a Small Business

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, legal Structures, alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Business

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firms Assets

Managing Risk

Filters