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
Like new round of negotiations
Inform and allow for comparisons

2. Successful sale
Trade missions - trade shows - embassies - world franchise council
Banks - suppliers - owners - and employees
Ipo - sale - merger - draw cash out
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

3. What makes a business replicable
Deliver business system - signage - products - taught - good product - geographical acceptance
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
Renew - close - convert to independent store
Like new round of negotiations

4. Where to grow franchise
Low interest rates - low unemployment - good economy
Top 100 cities - proactive not reactive - controlled growth strategy
Fdd
15 years

5. Approach agreement renewal
Renew - close - convert to independent store
Who can afford it - ability to operate your franchise - where they live
Like new round of negotiations
Territory - opening dates - transfer fees - rights of first refusal and support

6. Evaluate potential franchisees
Finances - experience - education
Talk to franchisees - ask for data on company stores - press releases - conference calls
Yes - but they can run together
Ipo - sale - merger - draw cash out

7. What does a good clear franchise agreement articulate?
Like new round of negotiations
What is clearly expected of franchisee
10 days to think about contract 5 days with completed contract
Top 100 cities - proactive not reactive - controlled growth strategy

8. What do franchisors earn his money on?
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
Gross profit
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

9. Time good or bad to sell
Territory - opening dates - transfer fees - rights of first refusal and support
...
Low interest rates - low unemployment - good economy
10 days to think about contract 5 days with completed contract

10. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
Gross profit
Low interest rates - low unemployment - good economy
Fdd

11. Points negotiated in contract
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Gross profit
Territory - opening dates - transfer fees - rights of first refusal and support
15 years

12. 4 items on cover page
Deliver business system - signage - products - taught - good product - geographical acceptance
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Cashing out and maximizing value for stakeholders
Low interest rates - low unemployment - good economy

13. What do franchisees earn money on
Net profit
Trade missions - trade shows - embassies - world franchise council
10 days to think about contract 5 days with completed contract
Renew - close - convert to independent store

14. Not to franchise internationally

15. What has replaced ufoc
Fdd
Low interest rates - low unemployment - good economy
Net profit
Gross profit

16. Key items that go into valuing
Deliver business system - signage - products - taught - good product - geographical acceptance
Low interest rates - low unemployment - good economy
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

17. 6 ways to structure international franchise system
Renew - close - convert to independent store
Master - single units - multiple - joint venture - company owned stores
Banks - suppliers - owners - and employees
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

18. Average length of franchise agreement
...
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
15 years
Finances - experience - education

19. How do you find right partner
Low interest rates - low unemployment - good economy
Master - single units - multiple - joint venture - company owned stores
Trade missions - trade shows - embassies - world franchise council
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

20. Who can be a multiple stakeholder
Banks - suppliers - owners - and employees
Finances - experience - education
Master - single units - multiple - joint venture - company owned stores
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

21. 3 ways to ensure correct financial reporting
...
Like new round of negotiations
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Territory - opening dates - transfer fees - rights of first refusal and support

22. 5 considerations prior to franchising internationally
Deliver business system - signage - products - taught - good product - geographical acceptance
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
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

23. Do 10 day and 5 day rule run separately
Territory - opening dates - transfer fees - rights of first refusal and support
Low interest rates - low unemployment - good economy
Yes - but they can run together
Deliver business system - signage - products - taught - good product - geographical acceptance

24. Purpose of ufoc/fdd
Fdd
Inform and allow for comparisons
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Renew - close - convert to independent store

25. Options when agreement ends
Deliver business system - signage - products - taught - good product - geographical acceptance
Cashing out and maximizing value for stakeholders
15 years
Renew - close - convert to independent store

26. Considerations for franchising
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Territory - opening dates - transfer fees - rights of first refusal and support
What is clearly expected of franchisee

27. 10 day and 5 day rule
10 days to think about contract 5 days with completed contract
Gross profit
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Yes - but they can run together

28. What governs franchisee/franchisor relationship
Territory - opening dates - transfer fees - rights of first refusal and support
Top 100 cities - proactive not reactive - controlled growth strategy
Contract
Banks - suppliers - owners - and employees

29. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
15 years
What is clearly expected of franchisee

30. Goal of harvesting
Trade missions - trade shows - embassies - world franchise council
Inform and allow for comparisons
Low interest rates - low unemployment - good economy
Cashing out and maximizing value for stakeholders