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. Considerations for franchising
Inform and allow for comparisons
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Master - single units - multiple - joint venture - company owned stores
Deliver business system - signage - products - taught - good product - geographical acceptance

2. Average length of franchise agreement
Top 100 cities - proactive not reactive - controlled growth strategy
Talk to franchisees - ask for data on company stores - press releases - conference calls
What is clearly expected of franchisee
15 years

3. Goal of harvesting
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Cashing out and maximizing value for stakeholders
Talk to franchisees - ask for data on company stores - press releases - conference calls
Fdd

4. Successful sale
Master - single units - multiple - joint venture - company owned stores
Gross profit
Ipo - sale - merger - draw cash out
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

5. What do franchisees earn money on
...
Net profit
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
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

6. Typical ways harvesting occurs
15 years
...
Gross profit
Ipo - sale - merger - draw cash out

7. What governs franchisee/franchisor relationship
Who can afford it - ability to operate your franchise - where they live
Contract
Yes - but they can run together
10 days to think about contract 5 days with completed contract

8. What does a good clear franchise agreement articulate?
Master - single units - multiple - joint venture - company owned stores
Deliver business system - signage - products - taught - good product - geographical acceptance
Net profit
What is clearly expected of franchisee

9. Do 10 day and 5 day rule run separately
Yes - but they can run together
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Like new round of negotiations
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

10. 10 day and 5 day rule
Yes - but they can run together
10 days to think about contract 5 days with completed contract
Contract
Deliver business system - signage - products - taught - good product - geographical acceptance

11. 5 considerations prior to franchising internationally
Yes - but they can run together
15 years
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
10 days to think about contract 5 days with completed contract

12. How to evaluate financial potential
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Talk to franchisees - ask for data on company stores - press releases - conference calls
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Top 100 cities - proactive not reactive - controlled growth strategy

13. What do franchisors earn his money on?
Gross profit
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
Finances - experience - education
Cashing out and maximizing value for stakeholders

14. 3 ways to ensure correct financial reporting
Renew - close - convert to independent store
Low interest rates - low unemployment - good economy
Banks - suppliers - owners - and employees
...

15. How do you find right partner
...
What is clearly expected of franchisee
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Trade missions - trade shows - embassies - world franchise council

16. What makes a business replicable
Fdd
Low interest rates - low unemployment - good economy
Who can afford it - ability to operate your franchise - where they live
Deliver business system - signage - products - taught - good product - geographical acceptance

17. 6 ways to structure international franchise system
10 days to think about contract 5 days with completed contract
Deliver business system - signage - products - taught - good product - geographical acceptance
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Master - single units - multiple - joint venture - company owned stores

18. Purpose of ufoc/fdd
10 days to think about contract 5 days with completed contract
Top 100 cities - proactive not reactive - controlled growth strategy
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Inform and allow for comparisons

19. Key items that go into valuing
Who can afford it - ability to operate your franchise - where they live
What is clearly expected of franchisee
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

20. Points negotiated in contract
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Territory - opening dates - transfer fees - rights of first refusal and support
Inform and allow for comparisons
Finances - experience - education

21. Options when agreement ends
Renew - close - convert to independent store
Master - single units - multiple - joint venture - company owned stores
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Deliver business system - signage - products - taught - good product - geographical acceptance

22. Who can be a multiple stakeholder
Banks - suppliers - owners - and employees
Yes - but they can run together
Cashing out and maximizing value for stakeholders
Fdd

23. 4 items on cover page
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Inform and allow for comparisons
Who can afford it - ability to operate your franchise - where they live

24. Approach agreement renewal
Renew - close - convert to independent store
Yes - but they can run together
Finances - experience - education
Like new round of negotiations

25. Not to franchise internationally

26. Evaluate potential franchisees
Like new round of negotiations
10 days to think about contract 5 days with completed contract
Who can afford it - ability to operate your franchise - where they live
Finances - experience - education

27. What has replaced ufoc
Who can afford it - ability to operate your franchise - where they live
Banks - suppliers - owners - and employees
Trade missions - trade shows - embassies - world franchise council
Fdd

28. Time good or bad to sell
What is clearly expected of franchisee
Low interest rates - low unemployment - good economy
Renew - close - convert to independent store
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

29. Profile of franchisee
Contract
Territory - opening dates - transfer fees - rights of first refusal and support
Who can afford it - ability to operate your franchise - where they live
15 years

30. Where to grow franchise
Master - single units - multiple - joint venture - company owned stores
Trade missions - trade shows - embassies - world franchise council
Top 100 cities - proactive not reactive - controlled growth strategy
Low interest rates - low unemployment - good economy