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. What governs franchisee/franchisor relationship
Like new round of negotiations
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Contract
15 years

2. What do franchisees earn money on
Net profit
Talk to franchisees - ask for data on company stores - press releases - conference calls
Trade missions - trade shows - embassies - world franchise council
Territory - opening dates - transfer fees - rights of first refusal and support

3. Successful sale
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
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
...
Gross profit

4. 10 day and 5 day rule
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
Ipo - sale - merger - draw cash out
Talk to franchisees - ask for data on company stores - press releases - conference calls

5. What do franchisors earn his money on?
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
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Gross profit

6. Options when agreement ends
Deliver business system - signage - products - taught - good product - geographical acceptance
Renew - close - convert to independent store
Talk to franchisees - ask for data on company stores - press releases - conference calls
Inform and allow for comparisons

7. Considerations for franchising
Cashing out and maximizing value for stakeholders
Like new round of negotiations
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

8. Where to grow franchise
Top 100 cities - proactive not reactive - controlled growth strategy
Who can afford it - ability to operate your franchise - where they live
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
Banks - suppliers - owners - and employees

9. Average length of 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
15 years
Banks - suppliers - owners - and employees
Territory - opening dates - transfer fees - rights of first refusal and support

10. What makes a business replicable
Deliver business system - signage - products - taught - good product - geographical acceptance
...
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Master - single units - multiple - joint venture - company owned stores

11. Do 10 day and 5 day rule run separately
Who can afford it - ability to operate your franchise - where they live
Yes - but they can run together
Finances - experience - education
Territory - opening dates - transfer fees - rights of first refusal and support

12. What has replaced ufoc
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
15 years
Fdd
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

13. Points negotiated in contract
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
Territory - opening dates - transfer fees - rights of first refusal and support
Gross profit

14. 4 items on cover page
15 years
Renew - close - convert to independent store
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Contract

15. Who can be a multiple stakeholder
Trade missions - trade shows - embassies - world franchise council
What is clearly expected of franchisee
Banks - suppliers - owners - and employees
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

16. Not to franchise internationally

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17. How do you find right partner
Master - single units - multiple - joint venture - company owned stores
Finances - experience - education
Trade missions - trade shows - embassies - world franchise council
Like new round of negotiations

18. 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
Master - single units - multiple - joint venture - company owned stores
Talk to franchisees - ask for data on company stores - press releases - conference calls

19. How to evaluate financial potential
Net profit
15 years
Territory - opening dates - transfer fees - rights of first refusal and support
Talk to franchisees - ask for data on company stores - press releases - conference calls

20. Purpose of ufoc/fdd
Territory - opening dates - transfer fees - rights of first refusal and support
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Inform and allow for comparisons
Master - single units - multiple - joint venture - company owned stores

21. 6 ways to structure international franchise system
15 years
Master - single units - multiple - joint venture - company owned stores
Talk to franchisees - ask for data on company stores - press releases - conference calls
Cashing out and maximizing value for stakeholders

22. Approach agreement renewal
Fdd
Yes - but they can run together
Who can afford it - ability to operate your franchise - where they live
Like new round of negotiations

23. 3 ways to ensure correct financial reporting
...
Banks - suppliers - owners - and employees
Contract
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

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

25. Goal of harvesting
Inform and allow for comparisons
Who can afford it - ability to operate your franchise - where they live
Cashing out and maximizing value for stakeholders
What is clearly expected of franchisee

26. Evaluate potential franchisees
Like new round of negotiations
Low interest rates - low unemployment - good economy
Finances - experience - education
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

27. Profile of franchisee
10 days to think about contract 5 days with completed contract
Finances - experience - education
Who can afford it - ability to operate your franchise - where they live
Renew - close - convert to independent store

28. Key items that go into valuing
What is clearly expected of franchisee
Fdd
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

29. What does a good clear franchise agreement articulate?
What is clearly expected of franchisee
Trade missions - trade shows - embassies - world franchise council
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
10 days to think about contract 5 days with completed contract

30. Typical ways harvesting occurs
Finances - experience - education
Inform and allow for comparisons
Top 100 cities - proactive not reactive - controlled growth strategy
Ipo - sale - merger - draw cash out