Part II Launching Entrepreneurial Ventures Introduction to Entrepreneurship

Part II Launching Entrepreneurial Ventures Introduction to Entrepreneurship, Ninth Edition Chapter 7 Methods to Initiate Ventures Power. Point Presentation by Charlie Cook © 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) 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– 2

The Pathways to New Ventures for Entrepreneurs Creating the New Venture Acquiring an Existing Venture Pathways to New Ventures Obtaining a 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– 3

Creating New Ventures New-New Approaches to Creating a New Venture 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– 4

Acquisition of an Established Business Venture Personal Preferences Examination of Opportunities Acquiring an Established Entrepreneurial Venture Evaluation of the Venture Asking Key Questions © 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

Advantages of Acquiring an Ongoing Venture Less fear about successful future operation Reduced time and effort Purchasing at a good price Buying an Ongoing Venture © 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

Evaluation of the Selected Venture Factors Affecting Sale of the Venture The business environment Assets of the venture Profits, sales, and operating ratios © 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

Negotiating the Deal Information Time Factors Affecting Negotiations Pressure Alternatives © 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

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

Franchising: The Hybrid • Franchising Ø 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 Ø A purchaser of a franchise • Franchisor Ø 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– 10

Franchising • Advantages Ø Training and guidance Ø Brand-name appeal Ø A proven track record Ø Financial assistance • Disadvantages Ø Franchise fees Ø Franchisor control Ø 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– 11

Franchise Law • Franchise Disclosure Document (FDD) Ø Is divided into 24 items that provide different segments of information for prospective franchisees. Ø 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– 12

Evaluating Franchising Opportunities The Franchise Opportunity Decision Finding Reliable Information Investigating the Franchisor Seeking Professional Help © 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