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. Average length of franchise agreement
Territory - opening dates - transfer fees - rights of first refusal and support
15 years
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

2. Successful sale
Inform and allow for comparisons
...
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Top 100 cities - proactive not reactive - controlled growth strategy

3. What does a good clear franchise agreement articulate?
Gross profit
What is clearly expected of franchisee
Renew - close - convert to independent store
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

4. What do franchisors earn his money on?
10 days to think about contract 5 days with completed contract
Gross profit
15 years
Deliver business system - signage - products - taught - good product - geographical acceptance

5. What governs franchisee/franchisor relationship
Contract
Deliver business system - signage - products - taught - good product - geographical acceptance
Yes - but they can run together
Renew - close - convert to independent store

6. Approach agreement renewal
...
Like new round of negotiations
Renew - close - convert to independent store
Cashing out and maximizing value for stakeholders

7. How to evaluate financial potential
Trade missions - trade shows - embassies - world franchise council
Talk to franchisees - ask for data on company stores - press releases - conference calls
Finances - experience - education
Gross profit

8. What has replaced ufoc
Fdd
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
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

9. Key items that go into valuing
Renew - close - convert to independent store
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Yes - but they can run together
Territory - opening dates - transfer fees - rights of first refusal and support

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

11. Time good or bad to sell
Cashing out and maximizing value for stakeholders
Low interest rates - low unemployment - good economy
Territory - opening dates - transfer fees - rights of first refusal and support
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

12. 3 ways to ensure correct financial reporting
...
Inform and allow for comparisons
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Talk to franchisees - ask for data on company stores - press releases - conference calls

13. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Finances - experience - education
10 days to think about contract 5 days with completed contract

14. 4 items on cover page
...
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
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

15. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
What is clearly expected of franchisee
...
Net profit

16. How do you find right partner
Trade missions - trade shows - embassies - world franchise council
Talk to franchisees - ask for data on company stores - press releases - conference calls
Finances - experience - education
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

17. 5 considerations prior to franchising internationally
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
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
15 years

18. Where to grow franchise
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Top 100 cities - proactive not reactive - controlled growth strategy
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.

19. Not to franchise internationally

20. What makes a business replicable
Trade missions - trade shows - embassies - world franchise council
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Deliver business system - signage - products - taught - good product - geographical acceptance
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

21. Evaluate potential franchisees
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Finances - experience - education
Master - single units - multiple - joint venture - company owned stores
Talk to franchisees - ask for data on company stores - press releases - conference calls

22. 10 day and 5 day rule
Contract
Top 100 cities - proactive not reactive - controlled growth strategy
10 days to think about contract 5 days with completed contract
...

23. What do franchisees earn money on
Net profit
Inform and allow for comparisons
Banks - suppliers - owners - and employees
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

24. Do 10 day and 5 day rule run separately
Talk to franchisees - ask for data on company stores - press releases - conference calls
Yes - but they can run together
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Gross profit

25. Who can be a multiple stakeholder
Trade missions - trade shows - embassies - world franchise council
Who can afford it - ability to operate your franchise - where they live
Renew - close - convert to independent store
Banks - suppliers - owners - and employees

26. Considerations for franchising
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Top 100 cities - proactive not reactive - controlled growth strategy
What is clearly expected of franchisee
Cashing out and maximizing value for stakeholders

27. Options when agreement ends
Fdd
Banks - suppliers - owners - and employees
10 days to think about contract 5 days with completed contract
Renew - close - convert to independent store

28. Profile of franchisee
15 years
Who can afford it - ability to operate your franchise - where they live
What is clearly expected of franchisee
Contract

29. Goal of harvesting
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
10 days to think about contract 5 days with completed contract
Cashing out and maximizing value for stakeholders

30. Purpose of ufoc/fdd
Inform and allow for comparisons
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Gross profit
Who can afford it - ability to operate your franchise - where they live