ENT CHAPTER 5 Business Formation

Front

What are the common methods to start a business?

Back

1. Start from scratch 2. Buy an existing business 3. Family business 4. Acquire a franchise

Front

What is the advantage of starting a business from scratch?

Back

Allows an entrepreneur to choose the preferred form of business, name the business, envision its product image, and may offer unique innovations.

Front

What is required when starting a business from scratch?

Back

Substantial efforts to acquire business knowledge, skills, and experience to ensure the ability to grow and sustain in the marketplace.

Front

What does buying an existing business involve?

Back

Taking over an existing business either by buying the whole business or part of it.

Front

What is due diligence in the context of buying a business?

Back

The reviewing process of all available information related to the business that the entrepreneur is interested in purchasing.

Front

What is the main purpose of due diligence?

Back

To verify the information provided by the seller and to uncover any relevant information that the seller has not provided.

Front

What is a family business succession?

Back

When successors take over businesses started by their predecessors, typically owned by at least two generations of a family.

Front

What is a franchise?

Back

A product and/or service distribution system governed by a contract between the franchisor and the franchisee.

Front

Who is the franchisor?

Back

The business that sells the right to another party to operate the franchise.

Front

Who is the franchisee?

Back

The person who purchases the right from the franchisor to operate the franchise.