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 do franchisees earn money on
Low interest rates - low unemployment - good economy
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Net profit
Deliver business system - signage - products - taught - good product - geographical acceptance

2. Average length of franchise agreement
Gross profit
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Territory - opening dates - transfer fees - rights of first refusal and support
15 years

3. 5 considerations prior to franchising internationally
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Cashing out and maximizing value for stakeholders
10 days to think about contract 5 days with completed contract

4. How do you find right partner
Fdd
10 days to think about contract 5 days with completed contract
Trade missions - trade shows - embassies - world franchise council
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

5. Not to franchise internationally

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6. Time good or bad to sell
Talk to franchisees - ask for data on company stores - press releases - conference calls
Top 100 cities - proactive not reactive - controlled growth strategy
Banks - suppliers - owners - and employees
Low interest rates - low unemployment - good economy

7. Considerations for franchising
Inform and allow for comparisons
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
...
Contract

8. Who can be a multiple stakeholder
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Banks - suppliers - owners - and employees
Trade missions - trade shows - embassies - world franchise council
Top 100 cities - proactive not reactive - controlled growth strategy

9. Successful sale
...
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
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. What do franchisors earn his money on?
Territory - opening dates - transfer fees - rights of first refusal and support
Low interest rates - low unemployment - good economy
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Gross profit

11. Evaluate potential franchisees
Deliver business system - signage - products - taught - good product - geographical acceptance
Finances - experience - education
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

12. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Fdd
Contract

13. Goal of harvesting
Cashing out and maximizing value for stakeholders
Ipo - sale - merger - draw cash out
Top 100 cities - proactive not reactive - controlled growth strategy
Fdd

14. What does a good clear franchise agreement articulate?
What is clearly expected of franchisee
Cashing out and maximizing value for stakeholders
15 years
Renew - close - convert to independent store

15. Where to grow franchise
Talk to franchisees - ask for data on company stores - press releases - conference calls
Net profit
Top 100 cities - proactive not reactive - controlled growth strategy
Like new round of negotiations

16. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
Territory - opening dates - transfer fees - rights of first refusal and support
Who can afford it - ability to operate your franchise - where they live
Trade missions - trade shows - embassies - world franchise council

17. What governs franchisee/franchisor relationship
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
Contract
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

18. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Deliver business system - signage - products - taught - good product - geographical acceptance
Top 100 cities - proactive not reactive - controlled growth strategy
Gross profit

19. Purpose of ufoc/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
What is clearly expected of franchisee
Inform and allow for comparisons
Territory - opening dates - transfer fees - rights of first refusal and support

20. Options when agreement ends
Ipo - sale - merger - draw cash out
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

21. What makes a business replicable
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
Deliver business system - signage - products - taught - good product - geographical acceptance
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

22. 3 ways to ensure correct financial reporting
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
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Fdd
...

23. What has replaced ufoc
15 years
Talk to franchisees - ask for data on company stores - press releases - conference calls
Fdd
Like new round of negotiations

24. Points negotiated in contract
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
Talk to franchisees - ask for data on company stores - press releases - conference calls
Contract

25. Do 10 day and 5 day rule run separately
Banks - suppliers - owners - and employees
Trade missions - trade shows - embassies - world franchise council
Yes - but they can run together
Finances - experience - education

26. Approach agreement renewal
Like new round of negotiations
What is clearly expected of franchisee
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Yes - but they can run together

27. How to evaluate financial potential
Deliver business system - signage - products - taught - good product - geographical acceptance
Gross profit
Top 100 cities - proactive not reactive - controlled growth strategy
Talk to franchisees - ask for data on company stores - press releases - conference calls

28. 4 items on cover page
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
15 years
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

29. Key items that go into valuing
15 years
Finances - experience - education
Talk to franchisees - ask for data on company stores - press releases - conference calls
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

30. 10 day and 5 day rule
Inform and allow for comparisons
10 days to think about contract 5 days with completed contract
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
Yes - but they can run together