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. Goal of harvesting
Cashing out and maximizing value for stakeholders
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Territory - opening dates - transfer fees - rights of first refusal and support
Gross profit

2. What has replaced ufoc
Top 100 cities - proactive not reactive - controlled growth strategy
10 days to think about contract 5 days with completed contract
Cashing out and maximizing value for stakeholders
Fdd

3. Average length of franchise agreement
Cashing out and maximizing value for stakeholders
Master - single units - multiple - joint venture - company owned stores
Talk to franchisees - ask for data on company stores - press releases - conference calls
15 years

4. 3 ways to ensure correct financial reporting
...
10 days to think about contract 5 days with completed contract
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

5. Successful sale
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Master - single units - multiple - joint venture - company owned stores
Yes - but they can run together

6. How do you find right partner
Finances - experience - education
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
Trade missions - trade shows - embassies - world franchise council
...

7. What makes a business replicable
Territory - opening dates - transfer fees - rights of first refusal and support
Deliver business system - signage - products - taught - good product - geographical acceptance
Master - single units - multiple - joint venture - company owned stores
Net profit

8. Do 10 day and 5 day rule run separately
Inform and allow for comparisons
Yes - but they can run together
Net profit
Renew - close - convert to independent store

9. What does a good clear franchise agreement articulate?
What is clearly expected of franchisee
Gross profit
Territory - opening dates - transfer fees - rights of first refusal and support
Master - single units - multiple - joint venture - company owned stores

10. Time good or bad to sell
Ipo - sale - merger - draw cash out
Top 100 cities - proactive not reactive - controlled growth strategy
Low interest rates - low unemployment - good economy
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

11. 6 ways to structure international franchise system
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
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
Master - single units - multiple - joint venture - company owned stores

12. Typical ways harvesting occurs
Who can afford it - ability to operate your franchise - where they live
Trade missions - trade shows - embassies - world franchise council
Ipo - sale - merger - draw cash out
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

13. Considerations for franchising
Cashing out and maximizing value for stakeholders
Banks - suppliers - owners - and employees
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Yes - but they can run together

14. 10 day and 5 day rule
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Who can afford it - ability to operate your franchise - where they live
10 days to think about contract 5 days with completed contract
Contract

15. Evaluate potential franchisees
Gross profit
Finances - experience - education
Deliver business system - signage - products - taught - good product - geographical acceptance
Inform and allow for comparisons

16. How to evaluate financial potential
Talk to franchisees - ask for data on company stores - press releases - conference calls
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

17. 4 items on cover page
Top 100 cities - proactive not reactive - controlled growth strategy
Low interest rates - low unemployment - good economy
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.

18. Points negotiated in contract
Yes - but they can run together
Territory - opening dates - transfer fees - rights of first refusal and support
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Fdd

19. What do franchisees earn money on
Net profit
Low interest rates - low unemployment - good economy
Deliver business system - signage - products - taught - good product - geographical acceptance
Master - single units - multiple - joint venture - company owned stores

20. Who can be a multiple stakeholder
Ipo - sale - merger - draw cash out
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Finances - experience - education
Banks - suppliers - owners - and employees

21. What do franchisors earn his money on?
Gross profit
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Contract
What is clearly expected of franchisee

22. What governs franchisee/franchisor relationship
Finances - experience - education
Gross profit
15 years
Contract

23. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
...
Like new round of negotiations
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

24. Not to franchise internationally

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25. Options when agreement ends
Banks - suppliers - owners - and employees
Low interest rates - low unemployment - good economy
Renew - close - convert to independent store
Gross profit

26. Where to grow franchise
Contract
Renew - close - convert to independent store
Deliver business system - signage - products - taught - good product - geographical acceptance
Top 100 cities - proactive not reactive - controlled growth strategy

27. Purpose of ufoc/fdd
Fdd
Renew - close - convert to independent store
Like new round of negotiations
Inform and allow for comparisons

28. 5 considerations prior to franchising internationally
Renew - close - convert to independent store
Trade missions - trade shows - embassies - world franchise council
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Low interest rates - low unemployment - good economy

29. Approach agreement renewal
Like new round of negotiations
Cashing out and maximizing value for stakeholders
What is clearly expected of franchisee
10 days to think about contract 5 days with completed contract

30. Key items that go into valuing
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
Renew - close - convert to independent store
Ipo - sale - merger - draw cash out