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Summary Entrepreneurship, SuccessComplete launching

new ventures, " Bruce R. Barringer
minor (Hogeschool van Amsterdam)

StudeerSnel wordt niet gesponsord of ondersteund door een hogeschool of universiteit

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Chapter 1 entrepreneurship

Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they
currently control.

It is also the art of tuning the idea into a business.

The essence of entrepreneurial behavior is identifying opportunities and putting useful ideas into practice.

Established firms with an orientation to acting entrepreneurially practice corporate entrepreneurship, which
is;

- The conceptualization of entrepreneurship at the firm level.

- All firms fall along a conceptual continuum that ranges from highly conservative to highly
entrepreneurial.
- The position of a firm on this continuum is referred to as entrepreneurial intensity.

An inventor creates something new.

An Entrepreneur puts together all resources needed to turn the idea into a successful business.

4 primary characteristics of successful entrepreneurs:

- Passion for the business

- Product/customer focus
- Tenacity despite failure
- Execution intelligence

Entrepreneurial firms Conservative firms

Proactive Wait and see posture
Innovative Less innovative
Risk taking Risk adverse

3 main reasons to become an entrepreneur:

1. The desire to be their own boss

2. The desire to pursue their own ideas
3. The financial rewards

A second defining characteristic of successful entrepreneur is a product/customer focus. Get the products in
the hand of as many people as possible.

Also they must have a tenacity despite failure, why;

- Because entrepreneurs are typically trying something new the failure rate is high.
- A defining characteristic for successful entrepreneurs is their ability to persevere through setbacks
and failure.

Execution intelligence is the ability to fashion a solid business idea into a viable business and it is a key
characteristic of successful entrepreneurs.

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5 common myths about entrepreneurship:

1. Entrepreneurs are born, not made.

2. Entrepreneurs are gamblers ( actually moderate risk takers)
3. Entrepreneurs should be young and energetic.
4. Entrepreneurs love the spotlight.

3 types of start-up firms:

- Salary substitute firms; easily available products, not innovative.

- Lifestyle firms; don’t grow quickly, not innovative.
- Entrepreneurial firms; create and seize opportunities.

Salary substitute firms are small firms that yield a level of income for their owner that is similar to what they
would earn when working for an employer.

Lifestyle firms provide their owner the opportunity to pursue a particular lifestyle and earn a living while
doing so.

Entrepreneurial firms bring new products and services to the market by creating and seizing opportunities
regardless of the resources they control.

Creative destruction is the developing of new products and technologies that over time make current
products and technologies obsolete.

For 2 reasons, entrepreneurial behavior has a strong impact on an economy’s strength:

1. Innovation (the process of creating something new)

2. Job creation

Entrepreneurial firms have built their entire business models around producing products and services that
help larger firms be more efficient or effective.

The entrepreneurial process;

Step 1 Deciding to become an entrepreneur

Step 2 Developing successful business ideas
Step 3 Moving from an idea to an entrepreneurial firm
Step 4 Managing and growing the entrepreneurial firm

Usually a triggering event prompts an individual to become an entrepreneur, for example, losing a job.

Chapter 2

An opportunity is a favorable set of circumstances that creates a need for a new product, service or business.

An opportunity has four essential qualities:

1. Attractive
2. Durable
3. Timely
4. Anchored, in a product, service or business that creates or adds value for its buyer or end user.

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Window of opportunity is a metaphor describing the period in which firm can realistically enter a new
market.

An idea is different from an opportunity because it doesn’t always meet the criteria of an opportunity.

3 approaches to identify an opportunity:

- Observing trends
- Solving a problem
- Finding gaps in the market place

Most important trends are:

Economic trends, social trends, technological advantages and political action + regulatory changes.

Most entrepreneurial firms are started in 2 ways:

- Some firms are internally stimulated. An entrepreneur decides to start a firm, searches for and
recognized an opportunity, then starts a business.
- Other firms are externally stimulated. An entrepreneur recognizes a problem or an opportunity gap
and creates a business to fit it.

There are 2 ways for entrepreneurs so they can get a handle on changing environmental trends:

- They can carefully observe them

- They can purchase customized forecasts and market analyses from independent research firms.

Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. These
problems can be pinpointed through observing trends an through more simply means, such as, intuition,
serendipity, or chance.

A gap in the market place is often created when a product or service is needed by a specific group of people
but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers.

Characteristics that tend to make some people better at recognizing opportunities than others are:

- Prior experience
- Social networks
- Cognitive factors (Entrepreneurial alertness)
- Creativity

Opportunity recognition refers to the process of perceiving the possibility of a profitable new business or a
new product or service.

The corridor principle states that once an entrepreneur starts a firm, he or she begins a journey down a path
where corridors leading to new ventures become apparent.

Social networks: The extent and depth of an individual’s social network affects opportunity recognition.

Solo entrepreneurs: those who identified their business ideas on their own.

Network entrepreneurs: those who identified their ideas through social contacts.

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Relationships with other people are called ties.

Strong-tie relationships are characterized by frequent interaction between co-workers, friends and spouses.

Weak-tie relationships are characterized by infrequent interaction and ties between casual acquaintances.

Strong-tie relationships tend to reinforce insights and ideas that people already have.

Weak-tie relationships are not always between like-minded people so it can lead to new ideas.

Creativity is the process of generating a novel or useful idea.

The creativity process can be broken down into 5 stages:

1. Preparation: the background, experience, and knowledge that an entrepreneur brings to the
opportunity recognition process.
2. Incubation: the stage during which a person considers an idea or thinks about a problem.
3. Insight: the flash of recognition when the solution to a problem is seen or an idea is born.
4. Evaluation: the stage of the creative process during which an idea is subjected to scrutiny and
analyzed for its viability.
5. Elaboration: the stage during which the creative idea is put into a final form.

Techniques for generating ideas:

- Brainstorming
- Focus groups
- Surveys

Encouraging new ideas:

Establishing a focal point for ideas, such as an idea bank which is a physical or digital repository for sharing
ideas.

Protecting ideas from being lost or stolen:

Step 1. The idea should be in a tangible form.

Step 2. The idea should be secured.
Step 3. Avoid making an in advert or voluntary disclosure of an idea.

Chapter 3

Feasibility analysis is the process of determining if a business idea is viable.

The feasibility analysis is the preliminary evaluation of a business idea, concluded for the purpose of
determining whether the idea is worth pursuing.

The feasibility analysis should include 4 components:

- Product/service feasibility
- Industry/market feasibility
- Organizational feasibility
- Financial feasibility

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The industry/market feasibility analysis is an assessment of the overall appeal of the market for the product
or service being proposed.

Characteristics of attractive industries for new ventures are:

- Large and growing

- Important to the customer
- Are fairly young rather than old and mature
- Have rather high than low operating margins
- Are not crowded

The most effective business emerge from a process includes:

- Recognizing a business idea.

- Testing the feasibility of the idea.
- Writing a business plan.
- Launching the business.

Completing a feasibility analysis requires primary and secondary research.

Primary research is research that is collected by the person or persons completing the analysis. It normally
includes talking to business experts etc.

Secondary research probes data that is already collected such as industry studies.

Product/service feasibility analysis is an assessment of the overall appeal of the product or service being
proposed.

2 components:

- Product/service desirability
- Product/service demand

A concepts test includes showing a preliminary description of a product or service idea to industry experts
and prospective customers to solicit their feedback.

It usually contains the following:

- A description of the product or service.

- The intended target market.
- The benefits of the product or service.
- A description of how the product or service will be positioned relative to competitors.
- A brief description of the company’s management team.

The second component of product/service feasibility analysis is to determine if there is demand for the
products or service.

A buying intentions survey is an instrument that is used to gauge customer interest in a product or service.

The statement and survey should be distributed to 20 to 30 potential customers.

An industry is a group of firms producing a similar product or service.

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A firms target market is the limited portion of the industry after or to which it wants to appeal.

A niche market is a place within a larger market segment that represents a narrower group of customers
with similar interests.

2 reasons for a new firm to a niche market:

- It allows a firm to establish itself within an industry without competing against major competitors.
- A niche strategy allows a firm to focus.

Chapter 4

A Business Plan is a written narrative, typically 25 to 35 pages long, that describes what a new business plans
to accomplish.

For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm.

- Inside the firm, the plan helps the company develop a “road map” to follow in executing its
strategies and plans.
- Outside the firm, it introduces potential investors and other stakeholders to the business
opportunity the firm is pursuing and how it plans to pursue it.

There are two primary audiences for a firm’s business plan:

- Employees
- Investors and other external stakeholders

Employees are looking for a clearly written business plan, which articulates the vision and future plans of the
firm. It helps the employees of a firm operate in sync and move forward in a consistent and purposeful
manner.

Investors and other external stakeholders are looking for a firm’s business plan that makes the case that the
firm is a good use of an investor’s funds or the attention of other external stakeholders. The key is to include
facts generated through a properly conducted feasibility analysis. A business plan rings hollow if it is based
strictly on what an entrepreneur or team of founders “thinks” will happen.

Structure of the Business Plan

- To make the best impression, a business plan should follow a conventional structure, such as the
outline for the business plan shown in the chapter.
- Although some entrepreneurs want to demonstrate creativity in everything they do, departing from
the basic structure of the conventional business plan format is usually a mistake.
- Typically, investors are very busy people and want a plan where they can easily find critical
information.

Structure of the Business Plan

Software Packages: There are many software packages available that employ an interactive, menu-driven
approach to assist in the writing of a business plan. Some of these programs are very helpful. However,
entrepreneurs should avoid a boilerplate plan that looks as though it came from a “canned” source.

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Sense of Excitement. Along with facts and figures, a business plan needs to project a sense of anticipation
and excitement about the possibilities that surround a new venture.

Content of the Business Plan:

- The business plan should give clear and concise information on all the important aspects of the
proposed venture.
- It must be long enough to provide sufficient information yet short enough to maintain reader
interest.
- For most plans, 25 to 35 pages is sufficient.

Types of Business Plans; there are three types of business plans:

1. Summary business plan

2. Full business plan
3. Operational business plan

A summary business plan is 10 – 15 pages and works best for new ventures in the early stages of
development that want to ‘test the waters’ to see if investors are interested in their idea.

A full business plan is 25 – 35 pages and works best for new ventures who are at the point where they need
funding or financing. It serves as a blueprint for the company’s operations.

Operational business plan contains 40 – 100 pages and is meant primarily for an internal audience. It works
best as a tool for creating a blueprint for a new venture’s operations providing guidance to operational
managers.

The Executive Summary is a short overview of the entire business plan; it provides a busy reader with
everything that needs to be known about the new venture’s distinctive nature.

Industry Analysis: This section should begin by discussing the major trends in the industry in which the firm
intends to compete along with important characteristics of the industry, such as its size, attractiveness, and
profit potential.

Marketing Plan: This marketing plan should immediately follow the industry analysis and should provide
details about the new firm’s products or services.

Operations Plan: This section of the plan deals with the day-to-day operations of the company.

Financial Plan: The financial section of the plan must demonstrate the financial viability of the business. A
careful reader of the plan will scrutinize this section.

Chapter 5

Industry Analysis is business research that focuses on the potential of an industry. This is important because:

- Once it is determined that a new venture is feasible in regard to the industry and market in which it
will compete, a more in-depth analysis is needed to learn the ins and outs of the industry the firm
plans to enter.
- This analysis helps a firm determine if the niche markets it identified during feasibility analysis are
accessible and which ones represent the best point of entry for a new firm.

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When studying an industry, an entrepreneur must answer three questions before pursuing the idea of
starting a firm:

1. Is the industry accessible—in other words, is it a realistic place for a new venture to enter?
2. Does the industry contain markets that are ripe for innovation or are underserved?
3. Are there positions in the industry that will avoid some of the negative attributes of the industry as a
whole?

Firm-Level Factors: Include a firm’s assets, products, culture, teamwork among its employees, reputation,
and other resources.

Industry-Level Factors: Include threat of new entrants, rivalry among existing firms, bargaining power of
buyers, and related factors.

Explanation of the Five Forces Model

- The five competitive forces model is a framework for understanding the structure of an industry.
- The model is composed of the forces that determine industry profitability.
- The forces—the threat of substitutes, the threat of new entrants, rivalry among existing firms, the
bargaining power of suppliers, and the bargaining power of buyers— help determine the average
rate of return for the firms in an industry.
- Each of the five forces impacts the average rate of return for the firms in an industry by applying
pressure on industry profitability.
- Well-managed firms try to position their firms in a way that avoids or diminishes these forces—in an
attempt to beat the average rate of return of the industry.

Barriers to entry:

- Economies of scale: Industries that are characterized by large economies of scale are difficult for
new firms to enter, unless they are willing to accept a cost disadvantage.
- Product differentiation: Industries such as the soft drink industry that are characterized by firms with
strong brands are difficult to break into without spending heavily on advertising.
- Capital requirements The need to invest large amounts of money to gain entrance to an industry is
another barrier to entry. For example, it now takes about two years and $4 million to develop an
electronic game. Many new firms do not have the capital to compete at this level.
- Cost advantages independent of size Entrenched competitors may have cost advantages not related
to size. For example, the existing competitors in an industry may have purchased property when it
was much less expensive than a new entrant would have to pay.
- Access to distribution channels Distribution channels are often hard to crack. This is particularly true
in crowded markets, such as the convenience store market. For a new sports drink to be placed on
the shelf, it has to displace a product that is already there.
- Government and legal barriers In knowledge intensive industries, such as biotechnology and
software, patents, trademarks, and copyrights form major barriers to entry. Other industries, such as
broadcasting, require the granting of a license by a public authority.

Rivalry Among Existing Firms: In most industries, the major determinant of industry profitability is the level
of competition among existing firms.

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Factors that determine the nature and intensity of the rivalry among existing firms in an industry:

- Number and balance of competitors

- Degree of difference between products
- Growth rate of an industry
- Level of fixed costs

Bargaining Power of Suppliers: Suppliers can suppress the profitability of the industries to which they sell by
raising prices or reducing the quality of the components they provide.

Factors that have an impact on the ability of suppliers to exert pressure on buyers:

- Supplier concentration
- Switching costs
- Attractiveness of substitutes
- Threat of forward integration

Bargaining Power of Buyers: Buyers can suppress the profitability of the industries from which they purchase
by demanding price concessions or increases in quality.

Factors that have an impact on the ability of suppliers to exert pressure on buyers:

- Buyer group concentration

- Buyer’s costs
- Degree of standardization of supplier’s products
- Threat of backward integration

Emerging Industries: Industries in which standard operating procedures have yet to be developed. The
opportunity is first mover advantage.

Fragmented Industries: Industries that are characterized by a large number of firms of approximately equal
size. The opportunity is consolidation.

Mature Industries: Industries that are experiencing slow or no increase in demand. The Opportunities are
process innovation and after-sale service innovation.

Declining Industries: Industries that are experiencing a reduction in demand The opportunities are
leadership, establishing a niche market, and pursuing a cost reduction strategy.

Global Industries: Industries that are experiencing significant international sales. Opportunities:
multidomestic and global strategies.

Types of competitors of new ventures:

Collecting Competitive Intelligence: to complete a competitive analysis grid, a firm must first understand the
strategies and behaviors of its competitors.

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Chapter 6

A model is a plan or diagram that is used to make or describe something.

A firm’s business model is its plan or diagram for how it competes, uses its resources, structures its
relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it
generates.

The development of a firm’s business model follows the feasibility analysis stage of launching a new venture
but comes before writing a business plan.

The value chain is the string of activities that moves a product from the raw material stage, through
manufacturing and distribution, and ultimately to the end user.

Two fatal flaws can render a business model untenable from the beginning:

- A complete misread of the customer.

- Utterly unsound economics.

The first component of a business model is the core strategy, which describes how a firm competes relative
to its competitors.

Primary Elements of Core Strategy

- Mission statement.
- Product/market scope.
- Basis for differentiation.

The two most important strategic resources are:

- A firm’s core competencies.

- Strategic assets.

A firm’s partnership network is the third component of a business model. New ventures, in particular,
typically do not have the resources to perform key roles.

A firm’s partnership network includes:

- Suppliers.
- Other partners.

Customer Interface is the way a firm interacts with its customers hinges on how it chooses to compete.

The three elements of a company’s customer interface are:

Target customer, Fulfillment and support and Pricing model.

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Chapter 7

The most important thing that any entrepreneur, or team of entrepreneurs, can do to build a strong ethical
culture in their organization is to lead by example.

Establish a Code of Conduct. A code of conduct (or code of ethics) is a formal statement of an organization’s
values on certain ethical and social issues.

Select an Attorney Early. It is important for an entrepreneur to select an attorney as early as possible when
developing a business venture. It is critically important that the attorney be familiar with start-up issues.

Intellectual Property. For issues dealing with intellectual property (patents, trademarks, and copyrights) it is
essential to use an attorney who specializes in this field.

A nondisclosure agreement is a promise made by an employee or another party to not disclose the
company’s trade secrets.

A non-compete agreement prevents an individual from competing against a former employer for a specified
period of time.

A founders’ agreement (or shareholders’ agreement) is a written document that deals with issues such as
the relative split of the equity among the founders of the firm, how individual founders will be compensated
for the cash or the “sweat equity” they put into the firm, and how long the founders will have to remain with
the firm for their shares to fully vest.

Avoiding Legal Disputes. Most legal disputes are the result of misunderstandings, sloppiness, or a simple lack
of knowledge of the law. Getting bogged down in legal disputes is something an entrepreneur should work
hard to avoid.

There are several steps that an entrepreneur can take to avoid legal disputes:

- Meet all contractual obligations.

- Avoid undercapitalization.
- Get everything in writing.
- Promote business ethics.

When a business is launched a form of Legal entity must be chosen. The common legal entities are:

- Sole proprietorship
- Corporation
- Partnership
- Limited liability company

Chapter 9

A New Venture Team is the group of founders, key employees, and advisers that move a new venture from
an idea to a fully functioning firm.

Founder or Founders. The characteristics of the founder or founders of a firm and their early decisions have
a significant impact on the manner in which the new venture team takes shape.

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Size of the Founding Team: Studies have shown that 50% to 70% of all new ventures are started by more
than one individual. It is believed that new ventures that are started by a team rather than a single individual
have an advantage.

Several factors are thought to be significant to a founder’s success.

- Higher education.
- Prior entrepreneurial experience.
- Relevant industry experience.
- The ability to “network” effectively.

Board of Directors: If a new venture organizes as a corporation, it is legally required to have a board of
directors. A board of directors is a panel of individuals who are elected by a corporation’s shareholders to
oversee the management of the firm.

A board is typically made up of both inside directors and outside directors:

- An inside director is a person who is also an officer of the firm.

- An outside director is someone who is not employed by the firm

A board of directors has three formal responsibilities.

- Appoint the officers of the firm.

- Declare dividends.
- Oversee the affairs of the corporation.

Chapter 10

The Nature of the Funding and Financing Process. A Few people deal with the process of raising investment
capital until they need to raise capital for their own firm. As a result, many entrepreneurs go about the task
of raising capital haphazardly because they lack experience in this area.

There are three reasons most new ventures need to raise money during their early life:

Venture Capital is money that is invested by venture-capital firms in start-ups and small businesses with
exceptional growth potential.

A lease is a written agreement in which the owner of a piece of property allows an individual or business to
use the property for a specified period of time in exchange for payments.

Strategic partners are another source of capital for new ventures.

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Chapter 12

Intellectual Property is any product of human intellect that is intangible but has value in the marketplace. It
is called “intellectual” property because it is the product of human imagination, creativity, and inventiveness.

2 criteria for determining intellectual property:

- Determine whether the intellectual property in question is directly related to the firm’s competitive
advantage
- Decide whether the intellectual property in question has value in the marketplace

4 key forms of intellectual property

1. Patents
2. Trademarks
3. Copyrights
4. Trade secrets

3 basic requirements for obtaining a patent:

A business method patent is a patent that protects an invention that is or facilitates a method of doing
business.

The process of obtaining a patent:

1. Make sure the invention is practical.

2. Document when the invention was made.
3. Hire a patent attorney.
4. Conduct a patent search.
5. File a patent application
6. Obtain decision from U.S. Patent and Trademark office.

Patent Infringement takes place when one party engages in the unauthorized use of another party’s patent.

A trademark is any word, name, symbol, or device used to identify the source or origin of products or
services and to distinguish those products or services from others.

Protected under trademark law:

- Words - Fragrances
- Numbers and letters - Shapes
- Designs or logo’s - Colors
- Trade dress - Sounds

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Protected by a copyright:

- Literary works
- Computer software
- Pantomimes and choreographic works
- Musical compositions
- Dramatic works
- Pictorial, graphic, and sculptural works

Copyright infringement occurs when one work derives from another or is an exact copy or shows substantial
similarity to the original work.

A trade secret is any formula, pattern, physical device, idea, process, or other information that provides the
owner of the information with a competitive advantage in the marketplace.

The Process of Conducting an Intellectual Property Audit:

- The first step is to develop an inventory of a firm’s existing intellectual property. The inventory
should include the firm’s present registrations of patents, trademarks, and copyrights.
- The second step is to identify works in progress to ensure that they are being documented and
protected in a systematic, orderly manner.

Chapter 13

Most entrepreneurial firms want to grow. Growth in sales revenue is exciting and is an important indicator of
an entrepreneurial venture’s potential for future success.

Reasons for firm growth:

- Capturing economies of scale.

- Capturing economies of scope.
- Executing a scalable business model
- Market leadership
- Influence, power, and survivability.
- Need to accommodate the growth of key customers.
- Ability to Attract and Retain Talented Employees

Economics of scope are similar to economies of scale, expect the advantage comes through the scope (or
range) of a firm’s operations rather than from its scale of production.

By benchmarking, a firm improves the quality of an activity by identifying and copying the methods of other
firms that have been successful in that area.

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Firm growth often includes:

- Raising additional capital.

- Recruiting new employees.
- Learning how to supervise a larger organization.
- Accepting more risk.
- Increased anxiety for the owners and managers of a firm

A firm’s administrative framework consists of two kinds of services that are important to firm growth:

- Entrepreneurial services generate new market, product, and service ideas, while managerial services
administer the routine functions of the firm and facilitate the profitable execution of new
opportunities.
- New product and service ideas require substantial managerial services (or managerial capacity) to be
successfully implemented.

Challenges of a growing firm:

- Cash flow management

- Price stability
- Quality control
- Capital constraints

A growth-oriented vision and/or mission statement clearly communicates to relevant stakeholders the
importance of growth to an organization.

A drive and commitment to achieve growth is frequently mentioned as a necessary precursor for successful
growth.

Business Growth Planning. Planning helps a firm organize for growth and address the relevant managerial
and strategic issues necessary to maintain growth.

Chapter 14

Internal growth strategies involve efforts taken within the firm itself, such as new product development,
other product-related strategies, and international expansion.

External growth strategies rely on establishing relationships with third parties, such as mergers, acquisitions,
strategic alliances, joint ventures, licensing, and franchising.

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New Product Development involves the creation and sale of new products (or services) as a means of
increasing firm revenues.
Product strategy:

- Improving an Existing Product or Service

- Increasing the Market Penetration of an Existing Product or Service
- Extending Product Lines
- Geographic Expansion

International growth:

Exporting: Producing a product at home and shipping it to a foreign market.

Licensing: An arrangement whereby a firm with the proprietary rights to a product grants permission to
another firm to manufacture that product for specified royalties or other payments.

Joint Ventures: Involves the establishment of a firm that is jointly owned by two or more otherwise
independent firms

Franchising: An agreement between a franchisor (a company like McDonald’s Inc. that has an established
business method and brand) and a franchisee (the owner of one or more McDonald’s restaurants).

Turnkey Project: A contractor from one country builds a facility in another country, trains the personnel that
will operate the facility, and turns over the keys to the project when it is completed and ready to operate.

Wholly Owned Subsidiary: A company that has made the decision to manufacture a product in a foreign
country and establish a permanent presence.

External growth strategies:

- Mergers and acquisitions

- Licensing
- Strategic alliances and joint ventures
- Franchising

Chapter 15

Franchising is a form of business organization in which a firm that already has a successful product or service
(franchisor) licenses its trademark and method of doing business to another business or individual
(franchisee) in exchange for a franchise fee and an ongoing royalty payment.

Franchising is most appropriate when a firm has a strong or potentially strong trademark, a well-designed
business method, and a desire to grow.

A franchise system will ultimately fail if the franchisee’s brand doesn’t add value for customers and its
business method is flawed or poorly developed.

The majority of franchisors and franchisees are highly ethical. There are certain features of franchising,
however, that make it subject to ethical abuse. These features are as follows:

1. The get rich quick mentality. 2. The false assumption that buying a franchise is a guarantee of
business success. 3. Conflicts of interest between franchisors and franchisees.

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