What is a franchise, and what are the primary advantages and disadvantages of having a franchise?
What will be an ideal response?
A franchise is a legal and commercial relationship between the owner of a trademark, service mark, or trade name and an individual or group who want the right to use that identification in business. The primary advantage of the franchise lies in guidance and possessing a known brand name. Many small businesses fail due to the lack of business knowledge on the part of the owner. The franchise agreement and relationship fills in some of those gaps. It is also extremely helpful to have a known and accepted brand as a solid base for your small business. Many other small businesses fail due to the lack of brand recognition. Perhaps the primary disadvantage of the franchise lies in the loss of control of the business. Through exclusive dealing and cancellation provision in the franchise agreement, much of the independence that the entrepreneur desires is eroded.
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When the bad news appears to be a logical outcome of the reasons that precede it, the reader is more prepared to accept it
Indicate whether the statement is true or false.
The product life-cycle concept from microeconomics and marketing provides useful insights into the relations among cash flows from operating, investing, and financing activities. During the _____ cash outflow exceeds cash inflow from operations because operations are not yet earning profits while the firm must invest in accounts receivable and inventories. Investing activities result in a net
cash outflow to build productive capacity. Firms must rely on external financing during this phase to overcome the negative cash flow from operations and investing. a. introduction phase b. growth phase c. mature phase d. late maturity phase e. decline phase
Distributable net income (DNI) does not include capital gains allocated to principal.
Answer the following statement true (T) or false (F)
The management of Hansley Corporation is investigating an investment in equipment that would have a useful life of 5 years. The company uses a discount rate of 18% in its capital budgeting. Good estimates are available for the initial investment and the annual cash operating outflows, but not for the annual cash inflows and the salvage value of the equipment. The net present value of the initial investment and the annual cash outflows is -$273,300. (Ignore income taxes.)See separate Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.Ignoring any salvage value, to the nearest whole dollar how large would the annual cash inflow have to be to make the investment in the equipment financially attractive?
A. $49,194 B. $273,300 C. $87,400 D. $54,660