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. What governs franchisee/franchisor relationship
Deliver business system - signage - products - taught - good product - geographical acceptance
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Contract
Master - single units - multiple - joint venture - company owned stores

2. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Territory - opening dates - transfer fees - rights of first refusal and support
Net profit
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

3. Goal of harvesting
Trade missions - trade shows - embassies - world franchise council
Banks - suppliers - owners - and employees
Cashing out and maximizing value for stakeholders
Top 100 cities - proactive not reactive - controlled growth strategy

4. Options when agreement ends
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Renew - close - convert to independent store
Low interest rates - low unemployment - good economy
Fdd

5. Evaluate potential franchisees
...
Trade missions - trade shows - embassies - world franchise council
Renew - close - convert to independent store
Finances - experience - education

6. Do 10 day and 5 day rule run separately
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Deliver business system - signage - products - taught - good product - geographical acceptance
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Yes - but they can run together

7. Where to grow franchise
Top 100 cities - proactive not reactive - controlled growth strategy
Low interest rates - low unemployment - good economy
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Renew - close - convert to independent store

8. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Finances - experience - education
Top 100 cities - proactive not reactive - controlled growth strategy
Banks - suppliers - owners - and employees

9. Who can be a multiple stakeholder
Finances - experience - education
Banks - suppliers - owners - and employees
Low interest rates - low unemployment - good economy
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

10. Time good or bad to sell
Low interest rates - low unemployment - good economy
Who can afford it - ability to operate your franchise - where they live
Yes - but they can run together
Banks - suppliers - owners - and employees

11. 10 day and 5 day rule
Fdd
10 days to think about contract 5 days with completed contract
Contract
Low interest rates - low unemployment - good economy

12. Average length of franchise agreement
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
Gross profit
15 years
Top 100 cities - proactive not reactive - controlled growth strategy

13. Typical ways harvesting occurs
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Cashing out and maximizing value for stakeholders
Territory - opening dates - transfer fees - rights of first refusal and support
Ipo - sale - merger - draw cash out

14. What does a good clear franchise agreement articulate?
Talk to franchisees - ask for data on company stores - press releases - conference calls
Who can afford it - ability to operate your franchise - where they live
What is clearly expected of franchisee
Cashing out and maximizing value for stakeholders

15. What has replaced ufoc
15 years
Fdd
Top 100 cities - proactive not reactive - controlled growth strategy
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

16. What do franchisees earn money on
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
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Top 100 cities - proactive not reactive - controlled growth strategy
Net profit

17. Points negotiated in contract
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Territory - opening dates - transfer fees - rights of first refusal and support
Banks - suppliers - owners - and employees
Contract

18. What makes a business replicable
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Inform and allow for comparisons
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Deliver business system - signage - products - taught - good product - geographical acceptance

19. Not to franchise internationally

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20. Considerations for franchising
Net profit
Inform and allow for comparisons
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

21. 5 considerations prior to franchising internationally
Banks - suppliers - owners - and employees
Low interest rates - low unemployment - good economy
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

22. Purpose of ufoc/fdd
Inform and allow for comparisons
Banks - suppliers - owners - and employees
...
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

23. Successful sale
Gross profit
...
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Inform and allow for comparisons

24. 4 items on cover page
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
Like new round of negotiations
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

25. What do franchisors earn his money on?
Cashing out and maximizing value for stakeholders
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Contract
Gross profit

26. How to evaluate financial potential
15 years
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Banks - suppliers - owners - and employees
Talk to franchisees - ask for data on company stores - press releases - conference calls

27. 3 ways to ensure correct financial reporting
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
...
Banks - suppliers - owners - and employees
10 days to think about contract 5 days with completed contract

28. Approach agreement renewal
Trade missions - trade shows - embassies - world franchise council
What is clearly expected of franchisee
Cashing out and maximizing value for stakeholders
Like new round of negotiations

29. Profile of franchisee
Finances - experience - education
Banks - suppliers - owners - and employees
Who can afford it - ability to operate your franchise - where they live
Contract

30. How do you find right partner
Cashing out and maximizing value for stakeholders
Trade missions - trade shows - embassies - world franchise council
What is clearly expected of franchisee
Contract