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. How to evaluate financial potential
Territory - opening dates - transfer fees - rights of first refusal and support
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Net profit
Talk to franchisees - ask for data on company stores - press releases - conference calls

2. How do you find right partner
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
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
15 years
Trade missions - trade shows - embassies - world franchise council

3. Typical ways harvesting occurs
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Ipo - sale - merger - draw cash out
What is clearly expected of franchisee
Low interest rates - low unemployment - good economy

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

5. Goal of harvesting
15 years
Like new round of negotiations
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Cashing out and maximizing value for stakeholders

6. 6 ways to structure international franchise system
Cashing out and maximizing value for stakeholders
Master - single units - multiple - joint venture - company owned stores
Ipo - sale - merger - draw cash out
Finances - experience - education

7. What does a good clear franchise agreement articulate?
Fdd
Cashing out and maximizing value for stakeholders
Territory - opening dates - transfer fees - rights of first refusal and support
What is clearly expected of franchisee

8. Time good or bad to sell
Fdd
Banks - suppliers - owners - and employees
Like new round of negotiations
Low interest rates - low unemployment - good economy

9. Successful sale
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Finances - experience - education
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Trade missions - trade shows - embassies - world franchise council

10. Who can be a multiple stakeholder
What is clearly expected of franchisee
Banks - suppliers - owners - and employees
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
...

11. 10 day and 5 day rule
Low interest rates - low unemployment - good economy
10 days to think about contract 5 days with completed contract
Fdd
Renew - close - convert to independent store

12. Average length of franchise agreement
Fdd
Renew - close - convert to independent store
15 years
Low interest rates - low unemployment - good economy

13. Not to franchise internationally

14. Purpose of ufoc/fdd
Low interest rates - low unemployment - good economy
Inform and allow for comparisons
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Cashing out and maximizing value for stakeholders

15. Evaluate potential franchisees
10 days to think about contract 5 days with completed contract
Trade missions - trade shows - embassies - world franchise council
Finances - experience - education
Inform and allow for comparisons

16. What governs franchisee/franchisor relationship
Contract
Like new round of negotiations
Cashing out and maximizing value for stakeholders
Top 100 cities - proactive not reactive - controlled growth strategy

17. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Trade missions - trade shows - embassies - world franchise council
Yes - but they can run together
Top 100 cities - proactive not reactive - controlled growth strategy

18. Points negotiated in contract
Territory - opening dates - transfer fees - rights of first refusal and support
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
15 years
Like new round of negotiations

19. Profile of franchisee
Territory - opening dates - transfer fees - rights of first refusal and support
What is clearly expected of franchisee
Who can afford it - ability to operate your franchise - where they live
Net profit

20. 3 ways to ensure correct financial reporting
Cashing out and maximizing value for stakeholders
Territory - opening dates - transfer fees - rights of first refusal and support
15 years
...

21. Considerations for franchising
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.
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

22. What has replaced ufoc
Fdd
15 years
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Banks - suppliers - owners - and employees

23. 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
Who can afford it - ability to operate your franchise - where they live
What is clearly expected of franchisee
Net profit

24. Options when agreement ends
Renew - close - convert to independent store
Net profit
Fdd
Ipo - sale - merger - draw cash out

25. What do franchisors earn his money on?
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Low interest rates - low unemployment - good economy
Territory - opening dates - transfer fees - rights of first refusal and support
Gross profit

26. 5 considerations prior to franchising internationally
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
Low interest rates - low unemployment - good economy

27. Approach agreement renewal
Like new round of negotiations
What is clearly expected of franchisee
Finances - experience - education
Inform and allow for comparisons

28. Where to grow franchise
15 years
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

29. 4 items on cover page
Net profit
Deliver business system - signage - products - taught - good product - geographical acceptance
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
...

30. What makes a business replicable
...
Ipo - sale - merger - draw cash out
Cashing out and maximizing value for stakeholders
Deliver business system - signage - products - taught - good product - geographical acceptance