Exam 4: Franchises and Buyouts

Match the term with its definition. -The exercise of reasonable care in the evaluation of a business opportunity

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

Edmond is negotiating to purchase an existing business. One provision he should write into the sale contract is

What options are available to the aspiring franchisee to assist in the evaluation of a franchising opportunity?

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 to

The registry maintained by the U.S. Small Business Administration

The offer and sale of a franchise are

As part of the valuation process, a buyer should scrutinize the seller's bank statements, supplier invoices, and customer receipts to validate the accuracy of the company's financial statements.

Match the term with its definition. -The legal agreement between franchisor and franchisee

Belinda signed a _____, which is a legal agreement between the franchisor and franchisee that spells out the relationship and obligations between the two parties.

Match the term with its definition. -The party in a franchise contract that is granted a license to do business under a particular trademark and trade name by the franchisor

Membership of the International Franchise Association (IFA) comprises over _____ percent of all registered franchisors _____.

Perhaps the most fundamental argument against the franchise model is that it increases the level of risk for business owners.

Where would you suggest Xavier look for information about possible franchise opportunities?

Which of the following is NOT one of the most common restrictions imposed on franchisees?

Individuals or firms that obtain the legal right to open several franchised businesses in a given area are referred to as

List and describe the cost components of becoming a franchisee.

The buyer of an existing business typically acquires its personnel, inventories, physical facilities, established banking connections, and ongoing relationships with trade suppliers and customers.

Match the term with its definition. -An independent firm or individual acting as a middleman or sales agent with the responsibility of finding new franchisees within a specified territory

Coca-Cola soft drink bottlers are an example of a product and trade name franchisor.