Exam 4: Franchises and Buyouts

A wise buyer will also evaluate the legal commitments of an existing business.

Match the term with its definition. -The operation of several franchised businesses within a single corporate structure

All of the following are examples of companies that engage in business format franchising EXCEPT

Why is it important for a new franchisee to follow the business plan detailed in the operations manual?

Starbucks operates outlets inside some grocery stores, such as Safeway and Kroger. This is an example of

All of the following are components of franchise costs EXCEPT

What is due diligence? What are some of the steps involved in the due diligence process?

In many cases, a franchisor will receive payments in the form of royalties that are based on a percentage of the franchisee's gross income.

Match the term with its definition. -A rule that requires the franchisor to disclose certain information to prospective franchisees

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 to

Match the term with its definition. -A franchise arrangement whereby the franchisee obtains an entire marketing, management system, and supply geared to entrepreneurs

Jeffrey's job is to identify potential businesspeople in his country who might want to do business using a particular brand name. When the contract is signed, Jeffrey then provides training to the businessperson. Jeffrey is most likely a

Which of the following is NOT a reason for buying an existing business?

Kelly is interested in opening an XYZ franchise. In addition to an up-front payment of $100,000, Kelly will have to pay building costs and purchase inventory and equipment. This type of expense is called

Fred's company specializes in bringing together buyers and sellers of businesses. Fred is a(n)

Leonard and the seller have agreed to a price for a business. Leonard cannot pay cash for the entire purchase price, so he applied for a bank loan. The bank is likely to

Martin operates an ABC franchise. Recently, the franchisor has attempted to make changes to the contract that would increase Martin's costs so as to make the business unprofitable. The franchisor is engaging in

Business brokers specialize in the sale of business firms and business properties.

Which of the following questions is the least important when developing a franchise from an independent business?

Franchisors support their franchisees by doing all of the following EXCEPT