Chapter 21 Franchising, Licensing, and Harvesting cashing in your brand Flashcards
1
Q
***Line extension
A
:using an established brand to promote different kinds of products
- Can work if brand is very strong & new products relate well
- Potential damage if products do not reinforce the brand
2
Q
***royalties:
A
percentage of sales to the licensor
3
Q
***Licensor:
A
sells license, which “rents” the right to use the licensor’s company name
4
Q
***Future earnings
A
- Based on estimated future earnings stream
- Best for quickly growing companies
- Must take into account the time value of money, as well as the rate of return
5
Q
Book value
A
Net Worth = Assets – Liabilities
6
Q
***Management buyout (MBO)
A
sell the firm to its managers
7
Q
***Employee stock ownership plan (ESOP)
A
- Establish a plan that allows employees to buy company stock as part of their retirement.
- When you are ready to exit, the ESOP borrows money and uses the cash to buy your stock.
8
Q
***Investors care about your exit strategy because it lets them know up front how their investment should eventually be turned into cash or stock.
A
Include your exit strategy in your business plan. Be specific about timing.
