Consider these Factors Crucial to Success in any New Business Endeavor

Reading Passage Question

Consider these factors crucial to success in any new business endeavor: start-up capital, creativity, experience, and management savvy. Now consider that the owner of a franchise is, in effect, the owner of his or her own business. Entrepreneurs should ask themselves these questions to determine whether franchise ownership is desirable: How much financing is required to start my business? Do I know how to find a creative niche in the marketplace? If so, am I capable of maintaining a unique market identity while also managing day-to-day business operations? Do I know how to create a business plan that will ensure financial success? Many prospective business owners who have shortcomings in these areas have turned to franchising as a way to reduce their risk of failure.

Companies that offer franchise opportunities have demonstrated their ability to succeed. They have built an effective business model, put it into operation, and realized financial gains. Still, the advantages of buying a franchise must be weighed against contractual issues that can become complicated when the interests of franchisees and franchisors conflict. Fees charged by the franchisor may become a source of conflict as the franchisee becomes more successful. Thus, before deciding to purchase a franchise, entrepreneurs should add this to their list of questions: Are franchise owners ever truly in command of their businesses or are they forever relegated, for all practical purposes, to the status of employees? The decision to franchise requires an entrepreneur to consider the degree of autonomy he or she desires in a business as well as the amount of preparation it would take to launch one.

“Consider these factors crucial to success in any new business endeavor”- is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension.

This GMAT Reading Comprehension consists of 3 comprehension questions. The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. The primary purpose of the passage is to encourage readers to

1. take better control of their business endeavors.
2. consider the advantages of operating a franchise if they personally have limited business experience.
3. enter contractual agreements with caution.
4. evaluate their own abilities and notions of entrepreneurial success before purchasing a franchise.
5. evaluate the motives of a potential franchisor who may take advantage of them.

2. The passage implies which of the following about the franchise arrangement?

1. It creates an illusion of success.
2. It puts the owners of established franchises at a disadvantage.
3. It may be a viable strategy for those with entrepreneurial shortcomings.
4. It impedes entrepreneurial goals.
5. It should be viewed by franchisees as a partnership.

3. The author most likely refers to a franchisor's fees in order to

1. intimate they may increase in direct proportion to revenues.
2. cite them as a potential eventual cause of antipathy.
3. imply they may seem lopsided with respect to the franchisee's profits.
4. caution that they may be unjustified in certain scenarios.
5. buttress the insinuation that there exists no autonomy in franchising.

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