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 franchisors earn his money on?
What is clearly expected of franchisee
Low interest rates - low unemployment - good economy
10 days to think about contract 5 days with completed contract
Gross profit

2. Considerations for franchising
Who can afford it - ability to operate your franchise - where they live
Fdd
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Master - single units - multiple - joint venture - company owned stores

3. Time good or bad to sell
Fdd
15 years
Low interest rates - low unemployment - good economy
Banks - suppliers - owners - and employees

4. 4 items on cover page
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
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
Fdd

5. Do 10 day and 5 day rule run separately
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Yes - but they can run together
What is clearly expected of franchisee
Gross profit

6. Profile of franchisee
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
Territory - opening dates - transfer fees - rights of first refusal and support
Renew - close - convert to independent store
Who can afford it - ability to operate your franchise - where they live

7. Average length of franchise agreement
15 years
Contract
Deliver business system - signage - products - taught - good product - geographical acceptance
Who can afford it - ability to operate your franchise - where they live

8. Points negotiated in contract
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Net profit
Territory - opening dates - transfer fees - rights of first refusal and support
Inform and allow for comparisons

9. Who can be a multiple stakeholder
What is clearly expected of franchisee
15 years
Banks - suppliers - owners - and employees
Cashing out and maximizing value for stakeholders

10. Successful sale
10 days to think about contract 5 days with completed contract
15 years
What is clearly expected of franchisee
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

11. What has replaced ufoc
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
10 days to think about contract 5 days with completed contract
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Fdd

12. Not to franchise internationally

13. Where to grow franchise
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
Renew - close - convert to independent store
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

14. Approach agreement renewal
Like new round of negotiations
Trade missions - trade shows - embassies - world franchise council
Contract
Talk to franchisees - ask for data on company stores - press releases - conference calls

15. What does a good clear franchise agreement articulate?
Top 100 cities - proactive not reactive - controlled growth strategy
What is clearly expected of franchisee
Fdd
Territory - opening dates - transfer fees - rights of first refusal and support

16. 3 ways to ensure correct financial reporting
Gross profit
Ipo - sale - merger - draw cash out
...
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

17. Goal of harvesting
Cashing out and maximizing value for stakeholders
Trade missions - trade shows - embassies - world franchise council
Banks - suppliers - owners - and employees
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

18. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
Talk to franchisees - ask for data on company stores - press releases - conference calls
Renew - close - convert to independent store
What is clearly expected of franchisee

19. What do franchisees earn money on
Net profit
10 days to think about contract 5 days with completed contract
Gross profit
Master - single units - multiple - joint venture - company owned stores

20. What makes a business replicable
Gross profit
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

21. Purpose of ufoc/fdd
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
Master - single units - multiple - joint venture - company owned stores
Inform and allow for comparisons

22. Options when agreement ends
Yes - but they can run together
Net profit
Talk to franchisees - ask for data on company stores - press releases - conference calls
Renew - close - convert to independent store

23. How do you find right partner
What is clearly expected of franchisee
Contract
Yes - but they can run together
Trade missions - trade shows - embassies - world franchise council

24. How to evaluate financial potential
Gross profit
Low interest rates - low unemployment - good economy
Talk to franchisees - ask for data on company stores - press releases - conference calls
Finances - experience - education

25. 10 day and 5 day rule
...
10 days to think about contract 5 days with completed contract
Talk to franchisees - ask for data on company stores - press releases - conference calls
Like new round of negotiations

26. Evaluate potential franchisees
Inform and allow for comparisons
Cashing out and maximizing value for stakeholders
Top 100 cities - proactive not reactive - controlled growth strategy
Finances - experience - education

27. 5 considerations prior to franchising internationally
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Master - single units - multiple - joint venture - company owned stores
Finances - experience - education
Territory - opening dates - transfer fees - rights of first refusal and support

28. What governs franchisee/franchisor relationship
Ipo - sale - merger - draw cash out
Contract
Talk to franchisees - ask for data on company stores - press releases - conference calls
Fdd

29. Key items that go into valuing
...
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Inform and allow for comparisons
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

30. 6 ways to structure international franchise system
Cashing out and maximizing value for stakeholders
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Low interest rates - low unemployment - good economy
Master - single units - multiple - joint venture - company owned stores