3 out of 3 points If you are a franchisor and you charge a royalty of 5% on revenue and you have franchisees that have revenues of $1 million, $2 million, $1.5 million, and $2.5 million, how much would you earn in royalties?
3 out of 3 points If you buy a McDonald's franchise and agree to pay a royalty fee of 12.5% annually, how much money will you owe McDonald's at the end of a year in which you sell $98,000 of product?
3 out of 3 points One way to grow your business is to use diversification, which is the addition of offerings beyond your core product or service.
Selected Answer: True
Correct Answer: True
3 out of 3 points If you want to buy a business that is growing rapidly, what is the best valuation method to use to determine a fair price for it?
Selected Answer: future earnings method
Correct Answer: future earnings method
3 out of 3 points Ways to value a business include comparison to other firms, benchmarking, or looking at a multiple of net earnings. Any of these methods is an attempt to arrive at a ________.
Selected Answer: fair market value
Correct Answer: fair market value
3 out of 3 points When one is merging or being acquired, ________.
Selected Answer: it is typically a quick and emotionless process
Correct Answer: it is typically a quick and emotionless process
3 out of 3 points In valuing a business, the methods that buyers and sellers can use include ________.
Selected Answer: market-based value
Correct Answer: market-based value
3 out of 3 points One way to value a business is to look at __________. In general, the business should sell for 3 to 5 times its annual net earnings.