ME Unit 2 Review

Match the following types of risks to their correct definition.

• Pure Risk

• Risks related directly to employees & their decisions/behavior

• Speculative Risk

• Risk that means there is a chance that the money invested in the business will be lost

• Natural Risks

• The business could experience either a profit or a loss based on a decision you choose to make

• Human Risks

• Risks due to natural disasters

• Economic Risk

• There will be no benefits for the business, and the business will definitely see a loss

Match the following franchise vocabulary words to their correct definition.

• Franchise

• The legal document that defines the terms between the corporation and the franchisee

• Franchisee

• A license to operate an existing business using the business’s brand and business model

• Franchiser

• The company offering the franchise

• Franchise Agreement

• The person buying the franchise

Ongoing payments that allow a person to use something copyrighted or licensed are know as _____.

• royalties

• the initial franchise fee

• yearly franchise fees.

When the public has likely already heard of the business and is familiar with the logo and/or product, this is known as _____.

• brand recognition

• brand popularity

• brand familiarity

All of the following are advantages of buying an existing business EXCEPT:

• Business is already known

• Typically comes with all necessary equipment

• Can be opened quickly, so money-making starts fast

• Customers and staff can be resistant to change

All of the following are disadvantages of running a family business EXCEPT:

• Disagreements can damage personal relationships

• Family members are more likely to have less professional training/experience

• Difficult to fire family members

• Family members are more likely to be committed to the business

Match the following vocabulary words to their correct definition.

• Insurable

• There is no insurance for certain risks

• Controllable

• There is nothing a business can do to prevent it from happening

• Uninsurable

• A good insurance policy will cover certain risks

• Uncontrollable

• An aspect of the business that the owner can control

Match the following vocabulary words to their correct definition.

• Vision Statement

• An official statement that outlines where the company wants to go

• Core Values

• The fundamental beliefs of an organization

• Mission Statement

• An official statement that defines the purpose of the company