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
Cashing out and maximizing value for stakeholders
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Territory - opening dates - transfer fees - rights of first refusal and support
Finances - experience - education

2. Evaluate potential franchisees
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Net profit
15 years
Finances - experience - education

3. What do franchisors earn his money on?
Low interest rates - low unemployment - good economy
Gross profit
15 years
Yes - but they can run together

4. 4 items on cover page
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
Ipo - sale - merger - draw cash out
What is clearly expected of franchisee

5. Time good or bad to sell
Low interest rates - low unemployment - good economy
Ipo - sale - merger - draw cash out
Top 100 cities - proactive not reactive - controlled growth strategy
Territory - opening dates - transfer fees - rights of first refusal and support

6. Points negotiated in contract
Territory - opening dates - transfer fees - rights of first refusal and support
Inform and allow for comparisons
What is clearly expected 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

7. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Net profit
Low interest rates - low unemployment - good economy
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

8. Who can be a multiple stakeholder
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Banks - suppliers - owners - and employees
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

9. What makes a business replicable
15 years
10 days to think about contract 5 days with completed contract
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Deliver business system - signage - products - taught - good product - geographical acceptance

10. Where to grow franchise
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Yes - but they can run together
Cashing out and maximizing value for stakeholders
Top 100 cities - proactive not reactive - controlled growth strategy

11. Successful sale
Yes - but they can run together
Cashing out and maximizing value for stakeholders
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Banks - suppliers - owners - and employees

12. Considerations for franchising
Who can afford it - ability to operate your franchise - where they live
Deliver business system - signage - products - taught - good product - geographical acceptance
Contract
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

13. What does a good clear franchise agreement articulate?
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
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
Fdd
What is clearly expected of franchisee

14. Purpose of ufoc/fdd
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Inform and allow for comparisons
10 days to think about contract 5 days with completed contract
Low interest rates - low unemployment - good economy

15. 3 ways to ensure correct financial reporting
Ipo - sale - merger - draw cash out
...
Master - single units - multiple - joint venture - company owned stores
Renew - close - convert to independent store

16. 10 day and 5 day rule
Gross profit
10 days to think about contract 5 days with completed contract
What is clearly expected of franchisee
15 years

17. Do 10 day and 5 day rule run separately
15 years
Yes - but they can run together
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Fdd

18. What do franchisees earn money on
Like new round of negotiations
Renew - close - convert to independent store
Net profit
Master - single units - multiple - joint venture - company owned stores

19. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
...
Territory - opening dates - transfer fees - rights of first refusal and support
15 years

20. Not to franchise internationally

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21. Goal of harvesting
...
What is clearly expected of franchisee
Cashing out and maximizing value for stakeholders
Who can afford it - ability to operate your franchise - where they live

22. Approach agreement renewal
Net profit
Fdd
Like new round of negotiations
15 years

23. 6 ways to structure international franchise system
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Master - single units - multiple - joint venture - company owned stores
Top 100 cities - proactive not reactive - controlled growth strategy
What is clearly expected of franchisee

24. Average length of franchise agreement
15 years
Who can afford it - ability to operate your franchise - where they live
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Low interest rates - low unemployment - good economy

25. Typical ways harvesting occurs
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
Ipo - sale - merger - draw cash out
Top 100 cities - proactive not reactive - controlled growth strategy

26. Options when agreement ends
Talk to franchisees - ask for data on company stores - press releases - conference calls
Inform and allow for comparisons
Renew - close - convert to independent store
10 days to think about contract 5 days with completed contract

27. How do you find right partner
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Trade missions - trade shows - embassies - world franchise council
Territory - opening dates - transfer fees - rights of first refusal and support
Net profit

28. How to evaluate financial potential
Cashing out and maximizing value for stakeholders
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Talk to franchisees - ask for data on company stores - press releases - conference calls
What is clearly expected of franchisee

29. What has replaced ufoc
Territory - opening dates - transfer fees - rights of first refusal and support
Cashing out and maximizing value for stakeholders
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Fdd

30. 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
Territory - opening dates - transfer fees - rights of first refusal and support
Net profit
Contract