978-1259912191 Chapter 14 Solutions Manual Part 2

Chapter Fourteen: Franchising and Purchasing an Existing

Business

1. What are the five general franchise questions that an entrepreneur should ask

about the franchise?

1) Evaluate one’s interest and skills to determine whether or not there is a fit

with the franchise and identify an industry or industries in which to

purchase a particular franchise opportunity.

2. What is the specific question that an entrepreneur asks about the support at a

potential franchise opportunity?

3. What are the five specific support areas of the franchise that an entrepreneur

learns to evaluate prior to the purchase of any franchise? What are the

advantages to the entrepreneur who discovers this information prior to the

purchase of any franchise?

The five specific support areas associated with the franchise that an

entrepreneur learns to evaluate prior to the purchase of any franchise include:

3) Training

IM 14-1

written consent of McGraw-Hill Education.

Chapter Fourteen: Franchising and Purchasing an Existing

Business

Critical Thinking Exercise 14.2: The Steps to Purchase an Existing Business

(LO 14-3)

As we learned in this chapter, the founding of a franchise is quite similar in form and

method to creating a new business from scratch. An entrepreneur who purchases an

existing business is required to understand several key issues.

1. What are the four important steps that an entrepreneur should consider when

purchasing an existing business?

2. What are five resources that an entrepreneur can utilize to purchase an existing

business?

3. What are six key issues that an entrepreneur initiates after purchasing an

existing business? Why are they important?

Critical Thinking Exercise 14.2: The Steps to Purchase an Existing Business – Notes

1. What are the four important steps that an entrepreneur should consider

when purchasing an existing business?

The four important steps that an entrepreneur should consider when purchasing

2. What are five resources that an entrepreneur can utilize to purchase an

existing business?

The student response to this question is expected to vary depending on the

perception or personal interest of the student. Suggested answers include?

IM 14-2

written consent of McGraw-Hill Education.

Chapter Fourteen: Franchising and Purchasing an Existing

Business

3. What are six key issues that an entrepreneur initiates after purchasing an

existing business? Why are they important?

The six key issues that an entrepreneur should initiate after the purchase of an

existing business:

Critical Thinking Exercise 14.3: Purchase an Existing Business

(LO 14-3)

An inquisitive entrepreneur evaluates the purchase of an existing business to determine

the potential of that business. Visit BizQuest (http://www.bizquest.com/, 2015)i at

http://www.bizquest.com and evaluate the resources that are available to a potential

business owner.

1. Perform a search under the “Business for Sale” tab and perform a search for a

business that is for sale in your area. What business did you discover that was

for sale in your area? Are you interested in this business? Why of why not?

2. Perform a search under the ‘Franchise for Sale” tab and perform a search for a

franchise that is for sale in your area. What franchise did you discover that was

IM 14-3

written consent of McGraw-Hill Education.

Chapter Fourteen: Franchising and Purchasing an Existing

Business

for sale in your area? Are you interested in purchasing this franchise? Why or

why not?

3. Summarize the additional information that you found beneficial at this website.

How will you use this information in the future?Critical Thinking Exercise 14.3:

Purchase an Existing Business – Notes

The purpose of this lesson is to get students motivated about finding a business or

franchise that is for sale in their area.

The students are expected to have a variety of answers here.

Bonus Cases

Bonus Case 14.1: Entrepreneurship and Business Plan Development

(LO 14-1, 14-2, 14-3)

Sometimes people can’t find suitable employment. What can individuals do if they can’t

find a job? Well, they can write, attend college to get retrained, work from home or, start

or buy an existing business or franchise. Individuals and groups learn to think outside of

the box when it comes down to employment and how to pay their bills. As a new

entrepreneur, it is your duty to enjoy the work that you perform on a daily basis.

During the course of this class, you learned the important elements related to the

development of a business plan. You learned that an individual can brainstorm and

develop a business idea, transform that idea into a viable business, and create a

business plan for your new and innovative business. Reflect on this and answer the

following questions:

1. What is your opinion of entrepreneurship? Do you believe that it is beneficial to

an individual who can’t find suitable employment?

2. Where do you see yourself in five years? In ten years? Summarize your

short-term goals and your long-term goals. Do you have a business plan?

3. Did you generate a new business idea based on the learning objectives in this

class? Describe the elements of the business that you plan to pursue.

Bonus Case 14.2: Famous Franchise Case Study

(LO 14-1, 14-2)

IM 14-4

written consent of McGraw-Hill Education.

Chapter Fourteen: Franchising and Purchasing an Existing

Business

There are many franchise opportunities for sale that an entrepreneur can evaluate as a

viable investment opportunity. For example, Pizza Hut Franchise is a popular Pizza

Restaurant. Is it a great franchise opportunity? According to FranchiseWorks.com (Pizza

Hut Franchise, 2015)ii, a Pizza Hut franchise is priced from “$500,000 to $1,500,000”;

and the “required capital” to purchase the franchise is “$360,000.” Will you purchase a

Pizza Hut Franchise?

Review the Franchise Works website at http://www.franchiseworks.com/franchise and

complete the following discussion questions:

Discussion Questions:

1. Do you believe that the Pizza Hut Franchise is a fair price? What are some of the

resources that are available to assist you with your finance needs to purchase

this franchise?

2. Visit the website and read the information that is provided about this franchise

opportunity. What is your opinion of the franchise?

3. Next, scroll down to the Franchise Information Request form. Review the

questions that are provided on the form. Will you complete this request form?

Why or why not?

4. What are some of the questions that you would ask a franchise representative?

Be specific.

Bonus Case 14.3: The American Association of Franchisees & Dealers (AAFD)

(LO 14-1, 14-2, 14-3)

Networking and trade associations are beneficial to an entrepreneur. They provide not

only social interaction, but a potential diversified base of customers to attract and retain

at the new business. Entrepreneurs learn to work smarter in developing the business

plan and establishing the operations at the business.

IM 14-5

written consent of McGraw-Hill Education.

Chapter Fourteen: Franchising and Purchasing an Existing

Business

One great resource for an entrepreneur is called the American Association of

Franchisees & Dealers (AAFD). “The AAFD is a national non-profit trade association

representing the rights and interests of franchisees and independent dealers throughout

the United States (American Association fo Franchisees & Dealers (AAFD), 2017)iii.”

Review their website at http://www.aafd.org and complete the questions related to the

case study.

Discussion Questions:

1. What is your opinion of trade associations? Do you believe they provide a

selection of unbiased resources to an entrepreneur as the business is being

built?

2. What are the AAFD’s Fair Franchising Standards?

3. What are the resources available as a result of a membership commitment?

Evaluate them and make a list of 5 resources that you find beneficial as an

entrepreneur.

4. Would you recommend them to a colleague? Why or why not?

Endnotes

IM 14-6

written consent of McGraw-Hill Education.

iBizQuest. The business for sale marketplace. http://www.bizquest.com/. Retrieved on February

25, 2015

ii Pizza Hut Franchise. FranchiseWorks.com. http://www.franchiseworks.com/franchise_main.aspx?

aid=57. Retrieved on February 25, 2015

iiiAmerican Association of Franchisees & Dealers (AFFD). (2009). http://www.aafd.org/

Retrieved on February 25, 2015