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. Evaluate potential franchisees
10 days to think about contract 5 days with completed contract
Finances - experience - education
Net profit
Like new round of negotiations

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

3. What do franchisees earn money on
Net profit
Finances - experience - education
10 days to think about contract 5 days with completed contract
What is clearly expected of franchisee

4. Who can be a multiple stakeholder
Finances - experience - education
Banks - suppliers - owners - and employees
...
Like new round of negotiations

5. Successful sale
Cashing out and maximizing value for stakeholders
Top 100 cities - proactive not reactive - controlled growth strategy
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

6. Average length of franchise agreement
15 years
Banks - suppliers - owners - and employees
Yes - but they can run together
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

7. What makes a business replicable
Deliver business system - signage - products - taught - good product - geographical acceptance
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Finances - experience - education
Gross profit

8. Where to grow franchise
Cashing out and maximizing value for stakeholders
Low interest rates - low unemployment - good economy
Yes - but they can run together
Top 100 cities - proactive not reactive - controlled growth strategy

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

10. Goal of harvesting
Cashing out and maximizing value for stakeholders
Finances - experience - education
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

11. Considerations for franchising
Cashing out and maximizing value for stakeholders
Yes - but they can run together
Ipo - sale - merger - draw cash out
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

12. Time good or bad to sell
Trade missions - trade shows - embassies - world franchise council
Yes - but they can run together
Low interest rates - low unemployment - good economy
Top 100 cities - proactive not reactive - controlled growth strategy

13. Profile of franchisee
Trade missions - trade shows - embassies - world franchise council
Inform and allow for comparisons
Ipo - sale - merger - draw cash out
Who can afford it - ability to operate your franchise - where they live

14. How to evaluate financial potential
Banks - suppliers - owners - and employees
Trade missions - trade shows - embassies - world franchise council
Talk to franchisees - ask for data on company stores - press releases - conference calls
Finances - experience - education

15. Typical ways harvesting occurs
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
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
Ipo - sale - merger - draw cash out
Territory - opening dates - transfer fees - rights of first refusal and support

16. What governs franchisee/franchisor relationship
15 years
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Contract
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

17. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Inform and allow for comparisons
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Cashing out and maximizing value for stakeholders

18. What do franchisors earn his money on?
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.
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Gross profit

19. Do 10 day and 5 day rule run separately
Top 100 cities - proactive not reactive - controlled growth strategy
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Yes - but they can run together
Inform and allow for comparisons

20. 10 day and 5 day rule
Banks - suppliers - owners - and employees
Renew - close - convert to independent store
Ipo - sale - merger - draw cash out
10 days to think about contract 5 days with completed contract

21. Options when agreement ends
Renew - close - convert to independent store
Low interest rates - low unemployment - good economy
15 years
...

22. Key items that go into valuing
Like new round of negotiations
10 days to think about contract 5 days with completed contract
15 years
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

23. 5 considerations prior to franchising internationally
Low interest rates - low unemployment - good economy
Trade missions - trade shows - embassies - world franchise council
Net profit
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

24. 3 ways to ensure correct financial reporting
Yes - but they can run together
...
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Trade missions - trade shows - embassies - world franchise council

25. What has replaced ufoc
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Ipo - sale - merger - draw cash out
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Fdd

26. Not to franchise internationally

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27. 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
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Deliver business system - signage - products - taught - good product - geographical acceptance

28. How do you find right partner
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
...
Inform and allow for comparisons
Trade missions - trade shows - embassies - world franchise council

29. 4 items on cover page
Renew - close - convert to independent store
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Talk to franchisees - ask for data on company stores - press releases - conference calls
Net profit

30. What does a good clear franchise agreement articulate?
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
What is clearly expected of franchisee
15 years
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources