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
Talk to franchisees - ask for data on company stores - press releases - conference calls
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Fdd
Low interest rates - low unemployment - good economy

2. What do franchisees earn money on
Net profit
15 years
Inform and allow for comparisons
Top 100 cities - proactive not reactive - controlled growth strategy

3. Considerations for franchising
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
What is clearly expected of franchisee
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

4. Options when agreement ends
Renew - close - convert to independent store
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Deliver business system - signage - products - taught - good product - geographical acceptance
Finances - experience - education

5. Successful sale
What is clearly expected of franchisee
...
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Yes - but they can run together

6. Approach agreement renewal
Inform and allow for comparisons
10 days to think about contract 5 days with completed contract
Like new round of negotiations
Yes - but they can run together

7. Average length of franchise agreement
Top 100 cities - proactive not reactive - controlled growth strategy
15 years
Cashing out and maximizing value for stakeholders
Low interest rates - low unemployment - good economy

8. What makes a business replicable
Cashing out and maximizing value for stakeholders
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
Top 100 cities - proactive not reactive - controlled growth strategy

9. 5 considerations prior to franchising internationally
Yes - but they can run together
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Trade missions - trade shows - embassies - world franchise council
Talk to franchisees - ask for data on company stores - press releases - conference calls

10. Key items that go into valuing
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
Territory - opening dates - transfer fees - rights of first refusal and support
...

11. Goal of harvesting
Cashing out and maximizing value for stakeholders
Who can afford it - ability to operate your franchise - where they live
Inform and allow for comparisons
Contract

12. What governs franchisee/franchisor relationship
Cashing out and maximizing value for stakeholders
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Contract
Ipo - sale - merger - draw cash out

13. What has replaced ufoc
Fdd
...
Low interest rates - low unemployment - good economy
Banks - suppliers - owners - and employees

14. How do you find right partner
Ipo - sale - merger - draw cash out
Inform and allow for comparisons
Trade missions - trade shows - embassies - world franchise council
Master - single units - multiple - joint venture - company owned stores

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

16. Time good or bad to sell
Fdd
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
Low interest rates - low unemployment - good economy
Cashing out and maximizing value for stakeholders

17. 10 day and 5 day rule
10 days to think about contract 5 days with completed contract
What is clearly expected of franchisee
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Net profit

18. Evaluate potential franchisees
Talk to franchisees - ask for data on company stores - press releases - conference calls
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
15 years
Finances - experience - education

19. 3 ways to ensure correct financial reporting
Who can afford it - ability to operate your franchise - where they live
...
Top 100 cities - proactive not reactive - controlled growth strategy
Trade missions - trade shows - embassies - world franchise council

20. 4 items on cover page
...
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Low interest rates - low unemployment - good economy

21. Do 10 day and 5 day rule run separately
Yes - but they can run together
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Master - single units - multiple - joint venture - company owned stores
Like new round of negotiations

22. Where to grow franchise
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Top 100 cities - proactive not reactive - controlled growth strategy
Fdd
Yes - but they can run together

23. Points negotiated in contract
Renew - close - convert to independent store
Territory - opening dates - transfer fees - rights of first refusal and support
Finances - experience - education
Master - single units - multiple - joint venture - company owned stores

24. Profile of franchisee
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
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
Fdd

25. Who can be a multiple stakeholder
Top 100 cities - proactive not reactive - controlled growth strategy
15 years
Banks - suppliers - owners - and employees
Gross profit

26. Typical ways harvesting occurs
Finances - experience - education
Ipo - sale - merger - draw cash out
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Cashing out and maximizing value for stakeholders

27. Not to franchise internationally

28. What do franchisors earn his money on?
Like new round of negotiations
10 days to think about contract 5 days with completed contract
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Gross profit

29. Purpose of ufoc/fdd
Trade missions - trade shows - embassies - world franchise council
Deliver business system - signage - products - taught - good product - geographical acceptance
Inform and allow for comparisons
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

30. What does a good clear franchise agreement articulate?
Master - single units - multiple - joint venture - company owned stores
Like new round of negotiations
10 days to think about contract 5 days with completed contract
What is clearly expected of franchisee