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. 5 considerations prior to franchising internationally
Inform and allow for comparisons
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Ipo - sale - merger - draw cash out
Top 100 cities - proactive not reactive - controlled growth strategy

2. How to evaluate financial potential
Talk to franchisees - ask for data on company stores - press releases - conference calls
Finances - experience - education
Banks - suppliers - owners - and employees
Like new round of negotiations

3. 3 ways to ensure correct financial reporting
...
Yes - but they can run together
Talk to franchisees - ask for data on company stores - press releases - conference calls
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

4. How do you find right partner
Who can afford it - ability to operate your franchise - where they live
Trade missions - trade shows - embassies - world franchise council
Inform and allow for comparisons
Fdd

5. Options when agreement ends
Renew - close - convert to independent store
Top 100 cities - proactive not reactive - controlled growth strategy
Like new round of negotiations
10 days to think about contract 5 days with completed contract

6. 4 items on cover page
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
Gross profit
Master - single units - multiple - joint venture - company owned stores

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

8. Goal of harvesting
Territory - opening dates - transfer fees - rights of first refusal and support
...
Cashing out and maximizing value for stakeholders
Gross profit

9. Profile of franchisee
Fdd
Inform and allow for comparisons
Who can afford it - ability to operate your franchise - where they live
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

10. Typical ways harvesting occurs
Ipo - sale - merger - draw cash out
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
10 days to think about contract 5 days with completed contract
Contract

11. Where to grow franchise
Master - single units - multiple - joint venture - company owned stores
Top 100 cities - proactive not reactive - controlled growth strategy
Finances - experience - education
What is clearly expected of franchisee

12. Successful sale
Top 100 cities - proactive not reactive - controlled growth strategy
Talk to franchisees - ask for data on company stores - press releases - conference calls
Yes - but they can run together
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

13. Not to franchise internationally

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14. What do franchisees earn money on
Inform and allow for comparisons
Renew - close - convert to independent store
Who can afford it - ability to operate your franchise - where they live
Net profit

15. Points negotiated in contract
Inform and allow for comparisons
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Banks - suppliers - owners - and employees
Territory - opening dates - transfer fees - rights of first refusal and support

16. Approach agreement renewal
Trade missions - trade shows - embassies - world franchise council
Inform and allow for comparisons
Renew - close - convert to independent store
Like new round of negotiations

17. What makes a business replicable
Finances - experience - education
Deliver business system - signage - products - taught - good product - geographical acceptance
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
What is clearly expected of franchisee

18. Average length of franchise agreement
Inform and allow for comparisons
Top 100 cities - proactive not reactive - controlled growth strategy
15 years
Cashing out and maximizing value for stakeholders

19. 6 ways to structure international franchise system
...
10 days to think about contract 5 days with completed contract
Talk to franchisees - ask for data on company stores - press releases - conference calls
Master - single units - multiple - joint venture - company owned stores

20. What governs franchisee/franchisor relationship
Yes - but they can run together
Contract
15 years
Low interest rates - low unemployment - good economy

21. 10 day and 5 day rule
10 days to think about contract 5 days with completed contract
Inform and allow for comparisons
Talk to franchisees - ask for data on company stores - press releases - conference calls
15 years

22. Time good or bad to sell
Low interest rates - low unemployment - good economy
Trade missions - trade shows - embassies - world franchise council
What is clearly expected of franchisee
Fdd

23. What do franchisors earn his money on?
Net profit
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Gross profit
Top 100 cities - proactive not reactive - controlled growth strategy

24. Evaluate potential franchisees
Finances - experience - education
What is clearly expected of franchisee
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

25. Purpose of ufoc/fdd
Like new round of negotiations
Yes - but they can run together
Inform and allow for comparisons
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

26. Considerations for franchising
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
...
Gross profit

27. What has replaced 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
Inform and allow for comparisons
Territory - opening dates - transfer fees - rights of first refusal and support

28. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Ipo - sale - merger - draw cash out
Gross profit
Who can afford it - ability to operate your franchise - where they live

29. What does a good clear franchise agreement articulate?
Gross profit
...
What is clearly expected of franchisee
Cashing out and maximizing value for stakeholders

30. Who can be a multiple stakeholder
Cashing out and maximizing value for stakeholders
...
Banks - suppliers - owners - and employees
Talk to franchisees - ask for data on company stores - press releases - conference calls