Management of Small Enterprise

Running Head: SMALL ENTERPRISE 0
Management of small Enterprise

SMALL ENTERPRISE 1
Chapter 4
Answer 1- Franchising is the substitute to the business ownership through which one party
that is franchisee grants the privilege of leading as distinct owner. However, franchisee is
required to operate as per the certain terms and methods specified by other party that is
franchisor. It brings both restriction and benefits that differs it from the other independent
ownership (Gaul, 2015).
Answer 2- Franchising provides several advantage and disadvantages for franchisor as well
as franchisee. For a franchisor, it can benefit from the continuous royalties. It also increases
the value of the brand. However, the biggest disadvantage for the franchisor is the legal
regulation. In order to successfully establish the business enterprise, franchisors are required
to work with the experienced franchise lawyer. For a franchise, the biggest advantage is the
established brand. It possesses the established brand that is easily recognized by the
consumers. For the franchise, its business also get benefit from the franchisor continued
support and training. The disadvantage of buying a franchise
Answer 3-The franchisee that tends to provide only the right of use trade name is known as
trade name franchisee. Soft drink bottlers are the example of this franchisee. As compare to
this, when a franchise ensures to provide the legal right for using the on-going assistance
relationship and guidance and the marketing system, is known as business format franchise.
Outlets of fast food are the example of such franchise. As compare to both, in the product
name franchise, manufacturer provides the license to franchisee for distributing as well as
selling the specific product by using the franchisor trade name, trademark, and logo.
Answer 4- It is beneficial to purchase the asset rather than buying the shares because by
purchasing the asset liability remains only with the seller company rather than transferring to
the buyer. In case of asset, it can only pick the right asset and leave the unwanted asset with
the seller. However, in case of buying the share, the biggest disadvantage is that buyer
becomes the sole shareholder of the company. Therefore, it is beneficial to purchase the asset
rather than buying the shares (Ramya & Mohamed, 2016).
Answer 5- The income approach includes the valuation method that tends to convert the
future anticipated economic benefits into the one-dollar amount. As compare to this, market
valuation approach make use of the transactional data for determining the company’s value.