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. 6 ways to structure international franchise system
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Master - single units - multiple - joint venture - company owned stores
Territory - opening dates - transfer fees - rights of first refusal and support

2. How to evaluate financial potential
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
15 years
Banks - suppliers - owners - and employees
Talk to franchisees - ask for data on company stores - press releases - conference calls

3. What makes a business replicable
Inform and allow for comparisons
Deliver business system - signage - products - taught - good product - geographical acceptance
Trade missions - trade shows - embassies - world franchise council
...

4. What do franchisors earn his money on?
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
Gross profit
What is clearly expected of franchisee

5. Average length of franchise agreement
15 years
Deliver business system - signage - products - taught - good product - geographical acceptance
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Fdd

6. Evaluate potential franchisees
...
Inform and allow for comparisons
Finances - experience - education
Trade missions - trade shows - embassies - world franchise council

7. What does a good clear franchise agreement articulate?
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Renew - close - convert to independent store
What is clearly expected of franchisee
...

8. 3 ways to ensure correct financial reporting
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

9. How do you find right partner
Inform and allow for comparisons
Gross profit
Low interest rates - low unemployment - good economy
Trade missions - trade shows - embassies - world franchise council

10. Options when agreement ends
...
Renew - close - convert to independent store
Contract
Like new round of negotiations

11. 10 day and 5 day rule
Who can afford it - ability to operate your franchise - where they live
Like new round of negotiations
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees

12. What do franchisees earn money on
Net profit
Gross profit
What is clearly expected of franchisee
Finances - experience - education

13. Goal of harvesting
Cashing out and maximizing value for stakeholders
Contract
What is clearly expected of franchisee
Trade missions - trade shows - embassies - world franchise council

14. Time good or bad to sell
Low interest rates - low unemployment - good economy
Like new round of negotiations
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

15. Approach agreement renewal
Cashing out and maximizing value for stakeholders
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Like new round of negotiations
Contract

16. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
15 years
Territory - opening dates - transfer fees - rights of first refusal and support
Cashing out and maximizing value for stakeholders

17. 4 items on cover page
Low interest rates - low unemployment - good economy
Like new round of negotiations
Banks - suppliers - owners - and employees
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

18. Key items that go into valuing
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
Net profit
15 years

19. 5 considerations prior to franchising internationally
Ipo - sale - merger - draw cash out
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Trade missions - trade shows - embassies - world franchise council
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

20. Considerations for franchising
10 days to think about contract 5 days with completed contract
Low interest rates - low unemployment - good economy
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
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

21. What has replaced ufoc
Banks - suppliers - owners - and employees
Low interest rates - low unemployment - good economy
Trade missions - trade shows - embassies - world franchise council
Fdd

22. Where to grow franchise
Master - single units - multiple - joint venture - company owned stores
Top 100 cities - proactive not reactive - controlled growth strategy
Banks - suppliers - owners - and employees
Contract

23. Do 10 day and 5 day rule run separately
Fdd
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
Like new round of negotiations
Yes - but they can run together

24. Purpose of ufoc/fdd
Inform and allow for comparisons
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
Banks - suppliers - owners - and employees

25. Successful sale
Banks - suppliers - owners - and employees
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

26. Not to franchise internationally

27. Points negotiated in contract
Territory - opening dates - transfer fees - rights of first refusal and support
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
Inform and allow for comparisons

28. Who can be a multiple stakeholder
Banks - suppliers - owners - and employees
Gross profit
Master - single units - multiple - joint venture - company owned stores
Yes - but they can run together

29. Profile of franchisee
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Who can afford it - ability to operate your franchise - where they live
Ipo - sale - merger - draw cash out
Like new round of negotiations

30. What governs franchisee/franchisor relationship
Like new round of negotiations
Contract
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Trade missions - trade shows - embassies - world franchise council