Test your basic knowledge |

Franchise Basics

Subjects : business-skills, industries

Instructions:

Answer 30 questions in 15 minutes.
If you are not ready to take this test, you can study here.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. How to evaluate financial potential
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Talk to franchisees - ask for data on company stores - press releases - conference calls
10 days to think about contract 5 days with completed contract

2. Considerations for franchising
Top 100 cities - proactive not reactive - controlled growth strategy
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Contract
Yes - but they can run together

3. Goal of harvesting
Doesn't meet local needs - no $ out of country - short term problems - no commitment - not willing to modify - and don't want to accommodation customs
What is clearly expected of franchisee
Net profit
Cashing out and maximizing value for stakeholders

4. What has replaced ufoc
Talk to franchisees - ask for data on company stores - press releases - conference calls
Master - single units - multiple - joint venture - company owned stores
Fdd
Yes - but they can run together

5. Average length of franchise agreement
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
15 years
10 days to think about contract 5 days with completed contract
What is clearly expected of franchisee

6. What do franchisors earn his money on?
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
Finances - experience - education
Gross profit

7. Key items that go into valuing
Top 100 cities - proactive not reactive - controlled growth strategy
Master - single units - multiple - joint venture - company owned stores
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

8. What governs franchisee/franchisor relationship
Finances - experience - education
Contract
15 years
Master - single units - multiple - joint venture - company owned stores

9. 5 considerations prior to franchising internationally
Cashing out and maximizing value for stakeholders
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
What is clearly expected of franchisee
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

10. Typical ways harvesting occurs
Who can afford it - ability to operate your franchise - where they live
Yes - but they can run together
...
Ipo - sale - merger - draw cash out

11. Not to franchise internationally

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12. Successful sale
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Finances - experience - education
Renew - close - convert to independent store
Cashing out and maximizing value for stakeholders

13. How do you find right partner
Trade missions - trade shows - embassies - world franchise council
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Low interest rates - low unemployment - good economy
Top 100 cities - proactive not reactive - controlled growth strategy

14. What do franchisees earn money on
Territory - opening dates - transfer fees - rights of first refusal and support
Contract
Net profit
Inform and allow for comparisons

15. Evaluate potential franchisees
Finances - experience - education
Like new round of negotiations
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Fdd

16. Profile of franchisee
Contract
Yes - but they can run together
Who can afford it - ability to operate your franchise - where they live
Inform and allow for comparisons

17. 10 day and 5 day rule
Fdd
Banks - suppliers - owners - and employees
10 days to think about contract 5 days with completed contract
Top 100 cities - proactive not reactive - controlled growth strategy

18. Approach agreement renewal
Talk to franchisees - ask for data on company stores - press releases - conference calls
Top 100 cities - proactive not reactive - controlled growth strategy
Like new round of negotiations
Low interest rates - low unemployment - good economy

19. What does a good clear franchise agreement articulate?
Doesn't meet local needs - no $ out of country - short term problems - no commitment - not willing to modify - and don't want to accommodation customs
What is clearly expected of franchisee
10 days to think about contract 5 days with completed contract
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

20. Points negotiated in contract
Deliver business system - signage - products - taught - good product - geographical acceptance
Territory - opening dates - transfer fees - rights of first refusal and support
...
Low interest rates - low unemployment - good economy

21. 4 items on cover page
Territory - opening dates - transfer fees - rights of first refusal and support
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

22. 3 ways to ensure correct financial reporting
Like new round of negotiations
What is clearly expected of franchisee
15 years
...

23. Time good or bad to sell
Cashing out and maximizing value for stakeholders
Low interest rates - low unemployment - good economy
Top 100 cities - proactive not reactive - controlled growth strategy
Inform and allow for comparisons

24. Do 10 day and 5 day rule run separately
Yes - but they can run together
Who can afford it - ability to operate your franchise - where they live
Cashing out and maximizing value for stakeholders
Top 100 cities - proactive not reactive - controlled growth strategy

25. What makes a business replicable
Territory - opening dates - transfer fees - rights of first refusal and support
Contract
Ipo - sale - merger - draw cash out
Deliver business system - signage - products - taught - good product - geographical acceptance

26. Where to grow franchise
Trade missions - trade shows - embassies - world franchise council
Top 100 cities - proactive not reactive - controlled growth strategy
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Low interest rates - low unemployment - good economy

27. Options when agreement ends
Renew - close - convert to independent store
10 days to think about contract 5 days with completed contract
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Like new round of negotiations

28. 6 ways to structure international franchise system
15 years
Talk to franchisees - ask for data on company stores - press releases - conference calls
Cashing out and maximizing value for stakeholders
Master - single units - multiple - joint venture - company owned stores

29. Purpose of ufoc/fdd
Top 100 cities - proactive not reactive - controlled growth strategy
Fdd
Gross profit
Inform and allow for comparisons

30. Who can be a multiple stakeholder
Banks - suppliers - owners - and employees
Renew - close - convert to independent store
Fdd
...