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
15 years
Like new round of negotiations
Yes - but they can run together
Contract

2. What has replaced ufoc
Net profit
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Fdd
Low interest rates - low unemployment - good economy

3. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
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
Fdd

4. Considerations for franchising
Contract
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Like new round of negotiations
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

5. Approach agreement renewal
10 days to think about contract 5 days with completed contract
Like new round of negotiations
Renew - close - convert to independent store
Gross profit

6. 5 considerations prior to franchising internationally
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
15 years
Top 100 cities - proactive not reactive - controlled growth strategy
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

7. Purpose of ufoc/fdd
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Top 100 cities - proactive not reactive - controlled growth strategy
Gross profit
Inform and allow for comparisons

8. Do 10 day and 5 day rule run separately
Renew - close - convert to independent store
Master - single units - multiple - joint venture - company owned stores
Yes - but they can run together
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

9. Successful sale
What is clearly expected of franchisee
Renew - close - convert to independent store
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Top 100 cities - proactive not reactive - controlled growth strategy

10. What do franchisors earn his money on?
Finances - experience - education
What is clearly expected of franchisee
Gross profit
Territory - opening dates - transfer fees - rights of first refusal and support

11. Options when agreement ends
Fdd
Yes - but they can run together
Renew - close - convert to independent store
Low interest rates - low unemployment - good economy

12. 6 ways to structure international franchise system
Banks - suppliers - owners - and employees
Low interest rates - low unemployment - good economy
Master - single units - multiple - joint venture - company owned stores
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

13. What does a good clear franchise agreement articulate?
What is clearly expected of franchisee
Renew - close - convert to independent store
Gross profit
Banks - suppliers - owners - and employees

14. How do you find right partner
Renew - close - convert to independent store
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Trade missions - trade shows - embassies - world franchise council
Deliver business system - signage - products - taught - good product - geographical acceptance

15. How to evaluate financial potential
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Yes - but they can run together
Talk to franchisees - ask for data on company stores - press releases - conference calls
Renew - close - convert to independent store

16. Key items that go into valuing
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
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Ipo - sale - merger - draw cash out

17. What do franchisees earn money on
Trade missions - trade shows - embassies - world franchise council
Yes - but they can run together
Net profit
Master - single units - multiple - joint venture - company owned stores

18. Where to grow franchise
Master - single units - multiple - joint venture - company owned stores
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Top 100 cities - proactive not reactive - controlled growth strategy
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

19. What makes a business replicable
Renew - close - convert to independent store
Deliver business system - signage - products - taught - good product - geographical acceptance
Low interest rates - low unemployment - good economy
10 days to think about contract 5 days with completed contract

20. Goal of harvesting
Cashing out and maximizing value for stakeholders
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
Talk to franchisees - ask for data on company stores - press releases - conference calls

21. 10 day and 5 day rule
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Banks - suppliers - owners - and employees
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

22. Average length of franchise agreement
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Banks - suppliers - owners - and employees
Fdd
15 years

23. Points negotiated in contract
Fdd
Territory - opening dates - transfer fees - rights of first refusal and support
Deliver business system - signage - products - taught - good product - geographical acceptance
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

24. Evaluate potential franchisees
Renew - close - convert to independent store
Cashing out and maximizing value for stakeholders
Who can afford it - ability to operate your franchise - where they live
Finances - experience - education

25. 4 items on cover page
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
Low interest rates - low unemployment - good economy
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Master - single units - multiple - joint venture - company owned stores

26. Who can be a multiple stakeholder
What is clearly expected of franchisee
Yes - but they can run together
Trade missions - trade shows - embassies - world franchise council
Banks - suppliers - owners - and employees

27. Not to franchise internationally

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28. Time good or bad to sell
Low interest rates - low unemployment - good economy
Renew - close - convert to independent store
Contract
Trade missions - trade shows - embassies - world franchise council

29. Profile of franchisee
Contract
Low interest rates - low unemployment - good economy
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

30. 3 ways to ensure correct financial reporting
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
Inform and allow for comparisons

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Franchise Basics

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