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Entrepreneurship Chapter 7 Flashcards | StudBud
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Entrepreneurship Chapter 7
Entrepreneurship Chapter 7
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Flashcards
25 cards
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Questions
25
Answers
1
A legally binding agreement between two or more persons or parties is called a license.
True
False
2
If you are buying an existing business, you should ask the owner for information in writing.
False
True
3
This law protects small businesses from unfair pricing practices.
Robinson-Patman Act
Sherman Act
Wheeler-Lea Act
Clayton Act
4
It is generally easier to start a new business than to buy an existing business.
True
False
5
A franchisee
has more freedom to make decisions than other entrepreneurs
can change recipes
can never have the franchise contract terminated
is dependent on the performance of other franchisees
6
Franchise ownership is declining in the United States.
False
True
7
Paid to the franchise company to support advertising as a whole.
all of these
initial franchise fee
advertising fees
royalty fees
8
The FTC requires franchisors to give potential franchisees a FDD 14 days in advance of sale.
False
True
9
The amount the local franchise owner pays in return for the right to run the franchise
royalty fees
all of these
initial franchise fee
advertising fees
10
A business owned exclusively by one person is called a
sole proprietorship
corporation
limited liability company
partnership
11
Initial franchise fees are usually refundable if you decide to change your line of business.
True
False
12
Franchisors often help buyers with marketing, merchandising, and site selection.
True
False
13
The copyright on a book remains in effect until the author dies.
True
False
14
Income earned by a sole proprietor is taxed twice: as a company and as an individual.
True
False
15
Weekly or monthly payments made by the local owner to the franchise company
all of these
royalty fees
advertising fees
initial franchise fee
16
A unit of ownership in a corporation is called a
dividend
certificate of deposit
share of stock
bond
17
Which of the following is NOT an advantage to buying an existing business?
capital is not required for a new business
financial arrangements can be easier
the seller may be willing to train the new owner
there are prior records for financial planning
18
Local governments control the types of buildings that can be built through use of
zoning regulations
copyrights
licenses
trademarks
19
The FBI monitors activities such as false advertising and price setting by competitors.
False
True
20
A corporation's board of directors is responsible for all of the following EXCEPT
day to day management of the corporation
determining the salaries of the executives
electing the corporation's officers
determining the amount of dividends
21
The MAIN reason entrepreneurs set up corporations is because
liability is limited to the amount invested by shareholders
ease of raising money
they are more prestigious than other forms of ownership
they are the easiest and least expensive form of ownership
22
All of the following information is included in a Franchise Disclosure Document EXCEPT:
the franchise fees and royalties
a brief history of the franchise
the terms of the franchise agreement
contact information for customers
23
Fees that the franchisee must pay to the franchisor
royalty fees
all of these
initial franchise fee
advertising fees
24
When buying an existing business, how many years of financial records should you request?
2 years
3 years
5 years
1 year
25
A legal agreement that gives an individual the right to market a companies products
franchisor
franchisee
franchise
none of these
