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. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
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
Fdd

2. 4 items on cover page
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Talk to franchisees - ask for data on company stores - press releases - conference calls
Deliver business system - signage - products - taught - good product - geographical acceptance
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

3. Profile of franchisee
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Who can afford it - ability to operate your franchise - where they live
Contract
15 years

4. How do you find right partner
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
Trade missions - trade shows - embassies - world franchise council
Banks - suppliers - owners - and employees

5. 3 ways to ensure correct financial reporting
Net profit
...
Fdd
Like new round of negotiations

6. Evaluate potential franchisees
Trade missions - trade shows - embassies - world franchise council
Finances - experience - education
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Contract

7. Points negotiated in contract
Deliver business system - signage - products - taught - good product - geographical acceptance
Territory - opening dates - transfer fees - rights of first refusal and support
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Yes - but they can run together

8. What do franchisees earn money on
Net profit
Ipo - sale - merger - draw cash out
Contract
Gross profit

9. Do 10 day and 5 day rule run separately
Who can afford it - ability to operate your franchise - where they live
Ipo - sale - merger - draw cash out
Contract
Yes - but they can run together

10. What do franchisors earn his money on?
Gross profit
Finances - experience - education
What is clearly expected of franchisee
Low interest rates - low unemployment - good economy

11. Average length of franchise agreement
15 years
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Yes - but they can run together
Low interest rates - low unemployment - good economy

12. What does a good clear franchise agreement articulate?
Deliver business system - signage - products - taught - good product - geographical acceptance
15 years
What is clearly expected of franchisee
Gross profit

13. Time good or bad to sell
Low interest rates - low unemployment - good economy
Fdd
Master - single units - multiple - joint venture - company owned stores
Territory - opening dates - transfer fees - rights of first refusal and support

14. Successful sale
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Cashing out and maximizing value for stakeholders
Top 100 cities - proactive not reactive - controlled growth strategy
Master - single units - multiple - joint venture - company owned stores

15. 5 considerations prior to franchising internationally
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Fdd
Like new round of negotiations
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

16. Who can be a multiple stakeholder
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Banks - suppliers - owners - and employees
10 days to think about contract 5 days with completed contract
...

17. Typical ways harvesting occurs
Like new round of negotiations
Who can afford it - ability to operate your franchise - where they live
Ipo - sale - merger - draw cash out
Renew - close - convert to independent store

18. What has replaced ufoc
Like new round of negotiations
Banks - suppliers - owners - and employees
Fdd
Deliver business system - signage - products - taught - good product - geographical acceptance

19. Options when agreement ends
Net profit
Renew - close - convert to independent store
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Banks - suppliers - owners - and employees

20. Purpose of ufoc/fdd
Inform and allow for comparisons
What is clearly expected of franchisee
Territory - opening dates - transfer fees - rights of first refusal and support
Top 100 cities - proactive not reactive - controlled growth strategy

21. Considerations for franchising
Net profit
Top 100 cities - proactive not reactive - controlled growth strategy
Renew - close - convert to independent store
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

22. 10 day and 5 day rule
Who can afford it - ability to operate your franchise - where they live
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
Renew - close - convert to independent store

23. How to evaluate financial potential
Cashing out and maximizing value for stakeholders
Gross profit
Talk to franchisees - ask for data on company stores - press releases - conference calls
Ipo - sale - merger - draw cash out

24. Approach agreement renewal
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Deliver business system - signage - products - taught - good product - geographical acceptance
Talk to franchisees - ask for data on company stores - press releases - conference calls
Like new round of negotiations

25. 6 ways to structure international franchise system
Contract
Finances - experience - education
Banks - suppliers - owners - and employees
Master - single units - multiple - joint venture - company owned stores

26. What governs franchisee/franchisor relationship
Contract
Like new round of negotiations
Low interest rates - low unemployment - good economy
Gross profit

27. Not to franchise internationally

28. Goal of harvesting
15 years
Banks - suppliers - owners - and employees
Gross profit
Cashing out and maximizing value for stakeholders

29. What makes a business replicable
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Territory - opening dates - transfer fees - rights of first refusal and support
Deliver business system - signage - products - taught - good product - geographical acceptance
Inform and allow for comparisons

30. Where to grow franchise
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
Gross profit