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. Options when agreement ends
Yes - but they can run together
...
Renew - close - convert to independent store
Low interest rates - low unemployment - good economy

2. Time good or bad to sell
Inform and allow for comparisons
Low interest rates - low unemployment - good economy
Trade missions - trade shows - embassies - world franchise council
Territory - opening dates - transfer fees - rights of first refusal and support

3. Who can be a multiple stakeholder
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
Trade missions - trade shows - embassies - world franchise council
15 years

4. Points negotiated in contract
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Territory - opening dates - transfer fees - rights of first refusal and support
Contract
...

5. What makes a business replicable
Deliver business system - signage - products - taught - good product - geographical acceptance
Gross profit
Ipo - sale - merger - draw cash out
Net profit

6. What does a good clear franchise agreement articulate?
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Finances - experience - education
Ipo - sale - merger - draw cash out
What is clearly expected of franchisee

7. Where to grow franchise
Territory - opening dates - transfer fees - rights of first refusal and support
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Top 100 cities - proactive not reactive - controlled growth strategy
Inform and allow for comparisons

8. What do franchisees earn money on
Master - single units - multiple - joint venture - company owned stores
Net profit
Yes - but they can run together
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

9. How do you find right partner
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
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
Finances - experience - education

10. Evaluate potential franchisees
Finances - experience - education
Fdd
Banks - suppliers - owners - and employees
Deliver business system - signage - products - taught - good product - geographical acceptance

11. Typical ways harvesting occurs
10 days to think about contract 5 days with completed contract
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Ipo - sale - merger - draw cash out
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

12. What governs franchisee/franchisor relationship
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Net profit
Low interest rates - low unemployment - good economy
Contract

13. 3 ways to ensure correct financial reporting
Talk to franchisees - ask for data on company stores - press releases - conference calls
15 years
Like new round of negotiations
...

14. Not to franchise internationally

15. 10 day and 5 day rule
Gross profit
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
Deliver business system - signage - products - taught - good product - geographical acceptance

16. Approach agreement renewal
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
Cashing out and maximizing value for stakeholders
Like new round of negotiations

17. Successful sale
15 years
Top 100 cities - proactive not reactive - controlled growth strategy
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Contract

18. Do 10 day and 5 day rule run separately
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Yes - but they can run together
Ipo - sale - merger - draw cash out
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

19. Considerations for franchising
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Low interest rates - low unemployment - good economy
Top 100 cities - proactive not reactive - controlled growth strategy
Yes - but they can run together

20. 4 items on cover page
Cashing out and maximizing value for stakeholders
Deliver business system - signage - products - taught - good product - geographical acceptance
Yes - but they can run together
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

21. What has replaced ufoc
Cashing out and maximizing value for stakeholders
Banks - suppliers - owners - and employees
Fdd
Ipo - sale - merger - draw cash out

22. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Renew - close - convert to independent store
15 years
Gross profit

23. Purpose of ufoc/fdd
Inform and allow for comparisons
Contract
Top 100 cities - proactive not reactive - controlled growth strategy
Yes - but they can run together

24. How to evaluate financial potential
Who can afford it - ability to operate your franchise - where they live
Master - single units - multiple - joint venture - company owned stores
Talk to franchisees - ask for data on company stores - press releases - conference calls
Net profit

25. Average length of franchise agreement
15 years
Yes - but they can run together
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Low interest rates - low unemployment - good economy

26. Goal of harvesting
Fdd
Cashing out and maximizing value for stakeholders
Ipo - sale - merger - draw cash out
Who can afford it - ability to operate your franchise - where they live

27. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
Like new round of negotiations
...
Low interest rates - low unemployment - good economy

28. 5 considerations prior to franchising internationally
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Fdd
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Who can afford it - ability to operate your franchise - where they live

29. What do franchisors earn his money on?
Territory - opening dates - transfer fees - rights of first refusal and support
Like new round of negotiations
Net profit
Gross profit

30. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Banks - suppliers - owners - and employees
Ipo - sale - merger - draw cash out
What is clearly expected of franchisee