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. 4 items on cover page
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
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
Inform and allow for comparisons
Talk to franchisees - ask for data on company stores - press releases - conference calls

2. What does a good clear franchise agreement articulate?
Inform and allow for comparisons
Who can afford it - ability to operate your franchise - where they live
What is clearly expected of franchisee
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

3. Profile of franchisee
Finances - experience - education
Low interest rates - low unemployment - good economy
Cashing out and maximizing value for stakeholders
Who can afford it - ability to operate your franchise - where they live

4. 10 day and 5 day rule
Who can afford it - ability to operate your franchise - where they live
Banks - suppliers - owners - and employees
10 days to think about contract 5 days with completed contract
Master - single units - multiple - joint venture - company owned stores

5. How do you find right partner
Low interest rates - low unemployment - good economy
Yes - but they can run together
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

6. Considerations for franchising
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Like new round of negotiations
15 years
Cashing out and maximizing value for stakeholders

7. Purpose of ufoc/fdd
10 days to think about contract 5 days with completed contract
What is clearly expected of franchisee
Inform and allow for comparisons
15 years

8. What do franchisors earn his money on?
Talk to franchisees - ask for data on company stores - press releases - conference calls
10 days to think about contract 5 days with completed contract
Gross profit
Yes - but they can run together

9. What makes a business replicable
Banks - suppliers - owners - and employees
Renew - close - convert to independent store
Deliver business system - signage - products - taught - good product - geographical acceptance
Yes - but they can run together

10. Approach agreement renewal
Low interest rates - low unemployment - good economy
Like new round of negotiations
Master - single units - multiple - joint venture - company owned stores
Gross profit

11. Not to franchise internationally

12. Key items that go into valuing
Yes - but they can run together
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
Talk to franchisees - ask for data on company stores - press releases - conference calls

13. What has replaced ufoc
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Fdd
Territory - opening dates - transfer fees - rights of first refusal and support
Who can afford it - ability to operate your franchise - where they live

14. Where to grow franchise
Trade missions - trade shows - embassies - world franchise council
Top 100 cities - proactive not reactive - controlled growth strategy
Master - single units - multiple - joint venture - company owned stores
10 days to think about contract 5 days with completed contract

15. Goal of harvesting
10 days to think about contract 5 days with completed contract
Trade missions - trade shows - embassies - world franchise council
Cashing out and maximizing value for stakeholders
Ipo - sale - merger - draw cash out

16. 5 considerations prior to franchising internationally
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Who can afford it - ability to operate your franchise - where they live
...
Inform and allow for comparisons

17. 3 ways to ensure correct financial reporting
Ipo - sale - merger - draw cash out
...
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Like new round of negotiations

18. Points negotiated in contract
Talk to franchisees - ask for data on company stores - press releases - conference calls
Like new round of negotiations
Territory - opening dates - transfer fees - rights of first refusal and support
15 years

19. Average length of franchise agreement
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Trade missions - trade shows - embassies - world franchise council
15 years
Who can afford it - ability to operate your franchise - where they live

20. Evaluate potential franchisees
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Finances - experience - education
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Cashing out and maximizing value for stakeholders

21. Time good or bad to sell
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
Low interest rates - low unemployment - good economy
Net profit

22. Successful sale
Inform and allow for comparisons
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
10 days to think about contract 5 days with completed contract
Talk to franchisees - ask for data on company stores - press releases - conference calls

23. What governs franchisee/franchisor relationship
Contract
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Gross profit
Talk to franchisees - ask for data on company stores - press releases - conference calls

24. Options when agreement ends
Renew - close - convert to independent store
What is clearly expected of franchisee
Contract
Like new round of negotiations

25. Do 10 day and 5 day rule run separately
Territory - opening dates - transfer fees - rights of first refusal and support
Who can afford it - ability to operate your franchise - where they live
Yes - but they can run together
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

26. What do franchisees earn money on
Net profit
Deliver business system - signage - products - taught - good product - geographical acceptance
Finances - experience - education
Cashing out and maximizing value for stakeholders

27. Typical ways harvesting occurs
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Who can afford it - ability to operate your franchise - where they live
Inform and allow for comparisons
Ipo - sale - merger - draw cash out

28. How to evaluate financial potential
Banks - suppliers - owners - and employees
Talk to franchisees - ask for data on company stores - press releases - conference calls
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

29. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Top 100 cities - proactive not reactive - controlled growth strategy
Cashing out and maximizing value for stakeholders

30. Who can be a multiple stakeholder
Master - single units - multiple - joint venture - company owned stores
Banks - suppliers - owners - and employees
Fdd
Top 100 cities - proactive not reactive - controlled growth strategy