Which of the following, if true, weakens the case for Short and Shearer buying an existing business?
A) Short and Shearer could more easily obtain financing for the purchase.
B) Buying an existing business involves fewer legal hurdles than starting a new one.
C) Franchises have more potential for success than single-facility businesses.
D) Short and Shearer have limited funds to start with.
E) Existing businesses cost less to purchase than new ones.
Answer: D
Explanation: D) If Short and Shearer have limited funds, they are probably not in a good position to pay the full purchase price for an existing business, which tends to have a lot of existing value. If, however, it costs less, they could easily obtain financing, or it involves fewer legal hurdles, these strengthen the case for buying an existing business. It is not given whether Short and Shearer are looking at buying a franchise or a single-facility business, so if a franchise is preferable, this does not weaken the case for their buying an existing business.
You might also like to view...
The first phase of market planning is to ________
A) identify a target market B) calculate production costs C) develop a value chain D) determine a market position E) analyze the marketing environment
A franchise is an arrangement in which semi-independent business owners pay fees and royalties to a parent company in return for the right to sell its products or services and often to use its business format and system
Indicate whether the statement is true or false