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. Purpose of ufoc/fdd
Inform and allow for comparisons
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
Renew - close - convert to independent store
Low interest rates - low unemployment - good economy

2. Points negotiated in contract
Gross profit
Territory - opening dates - transfer fees - rights of first refusal and support
Trade missions - trade shows - embassies - world franchise council
...

3. What has replaced ufoc
Fdd
Gross profit
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Who can afford it - ability to operate your franchise - where they live

4. Considerations for franchising
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Talk to franchisees - ask for data on company stores - press releases - conference calls
Inform and allow for comparisons
Trade missions - trade shows - embassies - world franchise council

5. What governs franchisee/franchisor relationship
Like new round of negotiations
Trade missions - trade shows - embassies - world franchise council
Contract
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

6. Key items that go into valuing
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Renew - close - convert to independent store
Deliver business system - signage - products - taught - good product - geographical acceptance
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

7. What does a good clear franchise agreement articulate?
Territory - opening dates - transfer fees - rights of first refusal and support
What is clearly expected of franchisee
Master - single units - multiple - joint venture - company owned stores
Like new round of negotiations

8. Time good or bad to sell
...
Top 100 cities - proactive not reactive - controlled growth strategy
Talk to franchisees - ask for data on company stores - press releases - conference calls
Low interest rates - low unemployment - good economy

9. 10 day and 5 day rule
Cashing out and maximizing value for stakeholders
10 days to think about contract 5 days with completed contract
Ipo - sale - merger - draw cash out
Territory - opening dates - transfer fees - rights of first refusal and support

10. Do 10 day and 5 day rule run separately
Deliver business system - signage - products - taught - good product - geographical acceptance
Yes - but they can run together
Who can afford it - ability to operate your franchise - where they live
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

11. Approach agreement renewal
Like new round of negotiations
15 years
Trade missions - trade shows - embassies - world franchise council
Inform and allow for comparisons

12. Where to grow franchise
Ipo - sale - merger - draw cash out
Master - single units - multiple - joint venture - company owned stores
...
Top 100 cities - proactive not reactive - controlled growth strategy

13. 5 considerations prior to franchising internationally
Trade missions - trade shows - embassies - world franchise council
Ipo - sale - merger - draw cash out
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

14. Successful sale
15 years
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Trade missions - trade shows - embassies - world franchise council
What is clearly expected of franchisee

15. Who can be a multiple stakeholder
Cashing out and maximizing value for stakeholders
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Banks - suppliers - owners - and employees
Ipo - sale - merger - draw cash out

16. 3 ways to ensure correct financial reporting
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Finances - experience - education
Deliver business system - signage - products - taught - good product - geographical acceptance
...

17. Goal of harvesting
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Cashing out and maximizing value for stakeholders
Contract
Who can afford it - ability to operate your franchise - where they live

18. How do you find right partner
Talk to franchisees - ask for data on company stores - press releases - conference calls
Territory - opening dates - transfer fees - rights of first refusal and support
Who can afford it - ability to operate your franchise - where they live
Trade missions - trade shows - embassies - world franchise council

19. Not to franchise internationally

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20. Average length of franchise agreement
Finances - experience - education
15 years
Territory - opening dates - transfer fees - rights of first refusal and support
Low interest rates - low unemployment - good economy

21. Typical ways harvesting occurs
Fdd
Banks - suppliers - owners - and employees
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Ipo - sale - merger - draw cash out

22. Evaluate potential franchisees
Low interest rates - low unemployment - good economy
Trade missions - trade shows - embassies - world franchise council
Finances - experience - education
Gross profit

23. What do franchisees earn money on
Ipo - sale - merger - draw cash out
Net profit
Master - single units - multiple - joint venture - company owned stores
...

24. What do franchisors earn his money on?
Low interest rates - low unemployment - good economy
Gross profit
15 years
Cashing out and maximizing value for stakeholders

25. 4 items on cover page
Renew - close - convert to independent store
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Inform and allow for comparisons
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

26. What makes a business replicable
10 days to think about contract 5 days with completed contract
Net profit
Deliver business system - signage - products - taught - good product - geographical acceptance
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

27. Profile of franchisee
Like new round of negotiations
Who can afford it - ability to operate your franchise - where they live
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Fdd

28. 6 ways to structure international franchise system
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Net profit
Master - single units - multiple - joint venture - company owned stores
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

29. Options when agreement ends
Renew - close - convert to independent store
Territory - opening dates - transfer fees - rights of first refusal and support
10 days to think about contract 5 days with completed contract
Top 100 cities - proactive not reactive - controlled growth strategy

30. How to evaluate financial potential
15 years
Master - single units - multiple - joint venture - company owned stores
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Talk to franchisees - ask for data on company stores - press releases - conference calls