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. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
10 days to think about contract 5 days with completed contract
Low interest rates - low unemployment - good economy
Fdd

2. 10 day and 5 day rule
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
Like new round of negotiations
Top 100 cities - proactive not reactive - controlled growth strategy

3. 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
Contract
Renew - close - convert to independent store
What is clearly expected of franchisee

4. Evaluate potential franchisees
Gross profit
What is clearly expected of franchisee
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Finances - experience - education

5. 5 considerations prior to franchising internationally
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on 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
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Low interest rates - low unemployment - good economy

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

7. Where to grow franchise
Top 100 cities - proactive not reactive - controlled growth strategy
Net profit
Deliver business system - signage - products - taught - good product - geographical acceptance
Cashing out and maximizing value for stakeholders

8. What governs franchisee/franchisor relationship
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Like new round of negotiations
15 years
Contract

9. Considerations for franchising
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Gross profit
Ipo - sale - merger - draw cash out
Fdd

10. 4 items on cover page
15 years
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Cashing out and maximizing value for stakeholders
Net profit

11. Average length of franchise agreement
Fdd
Renew - close - convert to independent store
15 years
10 days to think about contract 5 days with completed contract

12. What do franchisors earn his money on?
Deliver business system - signage - products - taught - good product - geographical acceptance
Finances - experience - education
Gross profit
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

13. Typical ways harvesting occurs
...
Deliver business system - signage - products - taught - good product - geographical acceptance
Ipo - sale - merger - draw cash out
Trade missions - trade shows - embassies - world franchise council

14. Purpose of ufoc/fdd
Inform and allow for comparisons
Contract
Cashing out and maximizing value for stakeholders
Deliver business system - signage - products - taught - good product - geographical acceptance

15. How do you find right partner
Trade missions - trade shows - embassies - world franchise council
Deliver business system - signage - products - taught - good product - geographical acceptance
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
...

16. Approach agreement renewal
Like new round of negotiations
Fdd
Contract
Ipo - sale - merger - draw cash out

17. Do 10 day and 5 day rule run separately
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Territory - opening dates - transfer fees - rights of first refusal and support
Gross profit

18. Profile of franchisee
Yes - but they can run together
Low interest rates - low unemployment - good economy
Who can afford it - ability to operate your franchise - where they live
Fdd

19. Key items that go into valuing
Gross profit
Finances - experience - education
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Renew - close - convert to independent store

20. What do franchisees earn money on
Net profit
Like new round of negotiations
Banks - suppliers - owners - and employees
Territory - opening dates - transfer fees - rights of first refusal and support

21. What has replaced ufoc
Top 100 cities - proactive not reactive - controlled growth strategy
Ipo - sale - merger - draw cash out
Fdd
Talk to franchisees - ask for data on company stores - press releases - conference calls

22. 3 ways to ensure correct financial reporting
Master - single units - multiple - joint venture - company owned stores
...
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Trade missions - trade shows - embassies - world franchise council

23. Not to franchise internationally

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24. Who can be a multiple stakeholder
Banks - suppliers - owners - and employees
Like new round of negotiations
Who can afford it - ability to operate your franchise - where they live
Top 100 cities - proactive not reactive - controlled growth strategy

25. Goal of harvesting
Yes - but they can run together
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Renew - close - convert to independent store
Cashing out and maximizing value for stakeholders

26. How to evaluate financial potential
Cashing out and maximizing value for stakeholders
Talk to franchisees - ask for data on company stores - press releases - conference calls
Fdd
Deliver business system - signage - products - taught - good product - geographical acceptance

27. Successful sale
15 years
Contract
Who can afford it - ability to operate your franchise - where they live
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

28. 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
15 years
Deliver business system - signage - products - taught - good product - geographical acceptance

29. Points negotiated in contract
Territory - opening dates - transfer fees - rights of first refusal and support
Cashing out and maximizing value for stakeholders
Like new round of negotiations
...

30. Options when agreement ends
Renew - close - convert to independent store
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
10 days to think about contract 5 days with completed contract