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. Typical ways harvesting occurs
Renew - close - convert to independent store
Net profit
Ipo - sale - merger - draw cash out
Fdd

2. 10 day and 5 day rule
Master - single units - multiple - joint venture - company owned stores
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
10 days to think about contract 5 days with completed contract
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

3. Not to franchise internationally

4. Who can be a multiple stakeholder
...
Trade missions - trade shows - embassies - world franchise council
Low interest rates - low unemployment - good economy
Banks - suppliers - owners - and employees

5. How do you find right partner
Trade missions - trade shows - embassies - world franchise council
Top 100 cities - proactive not reactive - controlled growth strategy
Who can afford it - ability to operate your franchise - where they live
...

6. What do franchisors earn his money on?
Net profit
Talk to franchisees - ask for data on company stores - press releases - conference calls
Yes - but they can run together
Gross profit

7. What governs franchisee/franchisor relationship
Inform and allow for comparisons
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
Contract

8. Time good or bad to sell
Low interest rates - low unemployment - good economy
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
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

9. 3 ways to ensure correct financial reporting
Contract
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
Top 100 cities - proactive not reactive - controlled growth strategy
...

10. Profile of franchisee
10 days to think about contract 5 days with completed contract
Top 100 cities - proactive not reactive - controlled growth strategy
Net profit
Who can afford it - ability to operate your franchise - where they live

11. What has replaced ufoc
Fdd
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
10 days to think about contract 5 days with completed contract

12. 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
Gross profit

13. 6 ways to structure international franchise system
Yes - but they can run together
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Master - single units - multiple - joint venture - company owned stores

14. What do franchisees earn money on
Yes - but they can run together
Banks - suppliers - owners - and employees
Net profit
Contract

15. Options when agreement ends
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Renew - close - convert to independent store
10 days to think about contract 5 days with completed contract
Who can afford it - ability to operate your franchise - where they live

16. Considerations for franchising
Finances - experience - education
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

17. Purpose of ufoc/fdd
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
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
Inform and allow for comparisons

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

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

20. What does a good clear franchise agreement articulate?
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Deliver business system - signage - products - taught - good product - geographical acceptance
Low interest rates - low unemployment - good economy
What is clearly expected of franchisee

21. Approach agreement renewal
Master - single units - multiple - joint venture - company owned stores
Net profit
Like new round of negotiations
Talk to franchisees - ask for data on company stores - press releases - conference calls

22. Where to grow franchise
Territory - opening dates - transfer fees - rights of first refusal and support
Renew - close - convert to independent store
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Top 100 cities - proactive not reactive - controlled growth strategy

23. Average length of franchise agreement
15 years
Top 100 cities - proactive not reactive - controlled growth strategy
Deliver business system - signage - products - taught - good product - geographical acceptance
Like new round of negotiations

24. 5 considerations prior to franchising internationally
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
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

25. Evaluate potential franchisees
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
15 years
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

26. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Renew - close - convert to independent store
Territory - opening dates - transfer fees - rights of first refusal and support
Ipo - sale - merger - draw cash out

27. Goal of harvesting
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Cashing out and maximizing value for stakeholders
Fdd
Inform and allow for comparisons

28. 4 items on cover page
Contract
Who can afford it - ability to operate your franchise - where they live
Inform and allow for comparisons
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

29. What makes a business replicable
10 days to think about contract 5 days with completed contract
Deliver business system - signage - products - taught - good product - geographical acceptance
Master - single units - multiple - joint venture - company owned stores
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

30. How to evaluate financial potential
...
Talk to franchisees - ask for data on company stores - press releases - conference calls
Renew - close - convert to independent store
Inform and allow for comparisons