PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook

Part IILaunching Entrepreneurial Ventures

Part IILaunching Entrepreneurial Ventures

C h a p t e r 7C h a p t e r 7Introduction to Entrepreneurshi

p,Ninth Edition

Methods to Initiate VenturesMethods to Initiate Ventures

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter Objectives (cont’d)

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–2

7. To examine the benefits and drawbacks of franchising

8. To present the franchise disclosure document (FDD) as a key item in franchises

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–3

The Pathways to New Ventures for Entrepreneurs

Acquiring an Existing Venture

Creating the New Venture

Obtaining a Franchise

Pathways to New Ventures

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–4

Creating New Ventures

Approaches to Creating a New

Venture

New-New Approach

New-Old Approach

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–5

Acquisition of an Established Business Venture

Acquiring an Established

Entrepreneurial Venture

Asking Key Questions

Examination of Opportunities

Evaluation of the Venture

Personal Preferences

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–6

Advantages of Acquiring an Ongoing Venture

Buying an Ongoing Venture

Purchasing at a good price

Reduced time and effort

Less fear about successful future

operation

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–7

Evaluation of the Selected Venture

Factors Affecting Sale of the Venture

Assets of the venture

Profits, sales, and operating ratios

The business environment

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–8

Negotiating the Deal

Factors Affecting Negotiations

Alternatives

Time Pressure

Information

Considerations When Buying a Business

• Request that the seller retain a minority interest in the business or make the final purchase price dependent on the performance of the business over a three-to-five-year span.

• Be wary of any promises made without written corroboration.

• Spend time reconstructing financial statements to determine how much cash is actually available.

• Interview the owner, vendors, competitors, customers, and employees.© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different

from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–9

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–10

Franchising: The Hybrid

• Franchising Any arrangement in which the owner of a trademark,

trade name, or copyright has licensed others to use it in selling goods or services.

• Franchisee A purchaser of a franchise

• Franchisor The seller of the franchise

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–11

Franchising

• Advantages Training and guidance Brand-name appeal A proven track record Financial assistance

• Disadvantages Franchise fees Franchisor control Unfulfilled promises

of franchisor

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–12

Franchise Law

• Franchise Disclosure Document (FDD) Is divided into 24 items that provide different

segments of information for prospective franchisees. Was developed to provide guidance in complying

with the Franchise Disclosure Rule that requires franchisors to make full presale disclosure about their franchises.

© 2014 Cengage Learning. All rights reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part. 7–13

Evaluating Franchising Opportunities

Seeking Professional Help

Investigating the Franchisor

Finding Reliable Information

The Franchise Opportunity Decision