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. 10 day and 5 day rule
Contract
Master - single units - multiple - joint venture - company owned stores
Territory - opening dates - transfer fees - rights of first refusal and support
10 days to think about contract 5 days with completed contract

2. Approach agreement renewal
Banks - suppliers - owners - and employees
Like new round of negotiations
Yes - but they can run together
What is clearly expected of franchisee

3. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
Yes - but they can run together
Master - single units - multiple - joint venture - company owned stores
Deliver business system - signage - products - taught - good product - geographical acceptance

4. Considerations for franchising
...
Ipo - sale - merger - draw cash out
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Low interest rates - low unemployment - good economy

5. What do franchisors earn his money on?
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Gross profit
Trade missions - trade shows - embassies - world franchise council
Master - single units - multiple - joint venture - company owned stores

6. Evaluate potential franchisees
Fdd
Finances - experience - education
Net profit
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

7. What does a good clear franchise agreement articulate?
Yes - but they can run together
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
What is clearly expected of franchisee

8. Who can be a multiple stakeholder
Ipo - sale - merger - draw cash out
Banks - suppliers - owners - and employees
Contract
Low interest rates - low unemployment - good economy

9. Successful sale
Renew - close - convert to independent store
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Fdd
Talk to franchisees - ask for data on company stores - press releases - conference calls

10. Average length of franchise agreement
Banks - suppliers - owners - and employees
Top 100 cities - proactive not reactive - controlled growth strategy
Finances - experience - education
15 years

11. Options when agreement ends
Low interest rates - low unemployment - good economy
Contract
Trade missions - trade shows - embassies - world franchise council
Renew - close - convert to independent store

12. Points negotiated in contract
Territory - opening dates - transfer fees - rights of first refusal and support
15 years
Ipo - sale - merger - draw cash out
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

13. What has replaced ufoc
Like new round of negotiations
Renew - close - convert to independent store
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Fdd

14. Where to grow franchise
Fdd
10 days to think about contract 5 days with completed contract
Top 100 cities - proactive not reactive - controlled growth strategy
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

15. 6 ways to structure international franchise system
Finances - experience - education
Master - single units - multiple - joint venture - company owned stores
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

16. What do franchisees earn money on
Top 100 cities - proactive not reactive - controlled growth strategy
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Net profit
Finances - experience - education

17. Do 10 day and 5 day rule run separately
10 days to think about contract 5 days with completed contract
Yes - but they can run together
Renew - close - convert to independent store
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

18. 5 considerations prior to franchising internationally
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
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Inform and allow for comparisons

19. Not to franchise internationally

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20. Goal of harvesting
Finances - experience - education
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Cashing out and maximizing value for stakeholders
...

21. Profile of franchisee
...
Who can afford it - ability to operate your franchise - where they live
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
Like new round of negotiations

22. 4 items on cover page
Low interest rates - low unemployment - good economy
What is clearly expected of franchisee
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
15 years

23. How do you find right partner
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Who can afford it - ability to operate your franchise - where they live
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Trade missions - trade shows - embassies - world franchise council

24. Purpose of ufoc/fdd
...
Inform and allow for comparisons
Gross profit
15 years

25. What governs franchisee/franchisor relationship
Master - single units - multiple - joint venture - company owned stores
Contract
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

26. Time good or bad to sell
Finances - experience - education
Low interest rates - low unemployment - good economy
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Contract

27. 3 ways to ensure correct financial reporting
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
...
Who can afford it - ability to operate your franchise - where they live

28. What makes a business replicable
Who can afford it - ability to operate your franchise - where they live
Banks - suppliers - owners - and employees
Deliver business system - signage - products - taught - good product - geographical acceptance
Master - single units - multiple - joint venture - company owned stores

29. How to evaluate financial potential
Renew - close - convert to independent store
Talk to franchisees - ask for data on company stores - press releases - conference calls
Low interest rates - low unemployment - good economy
Ipo - sale - merger - draw cash out

30. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Talk to franchisees - ask for data on company stores - press releases - conference calls
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Master - single units - multiple - joint venture - company owned stores