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. How do you find right partner
Trade missions - trade shows - embassies - world franchise council
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Contract
Yes - but they can run together

2. Purpose of ufoc/fdd
Inform and allow for comparisons
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Low interest rates - low unemployment - good economy
Fdd

3. Options when agreement ends
Cashing out and maximizing value for stakeholders
Renew - close - convert to independent store
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Yes - but they can run together

4. Where to grow franchise
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Top 100 cities - proactive not reactive - controlled growth strategy
...
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

5. Approach agreement renewal
Gross profit
Like new round of negotiations
Yes - but they can run together
Master - single units - multiple - joint venture - company owned stores

6. Key items that go into valuing
Territory - opening dates - transfer fees - rights of first refusal and support
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
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
...

7. What governs franchisee/franchisor relationship
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Banks - suppliers - owners - and employees
Contract
Like new round of negotiations

8. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Net profit
Cashing out and maximizing value for stakeholders
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

9. Goal of harvesting
Cashing out and maximizing value for stakeholders
Like new round of negotiations
Territory - opening dates - transfer fees - rights of first refusal and support
15 years

10. Time good or bad to sell
Inform and allow for comparisons
Talk to franchisees - ask for data on company stores - press releases - conference calls
Yes - but they can run together
Low interest rates - low unemployment - good economy

11. 4 items on cover page
...
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
Ipo - sale - merger - draw cash out

12. What do franchisors earn his money on?
Net profit
Inform and allow for comparisons
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Gross profit

13. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
Deliver business system - signage - products - taught - good product - geographical acceptance
Fdd
Like new round of negotiations

14. What makes a business replicable
Deliver business system - signage - products - taught - good product - geographical acceptance
Renew - close - convert to independent store
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
Top 100 cities - proactive not reactive - controlled growth strategy

15. Average length of franchise agreement
Ipo - sale - merger - draw cash out
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Net profit
15 years

16. Evaluate potential franchisees
Contract
Talk to franchisees - ask for data on company stores - press releases - conference calls
Fdd
Finances - experience - education

17. 5 considerations prior to franchising internationally
Contract
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Renew - close - convert to independent store

18. Typical ways harvesting occurs
...
Trade missions - trade shows - embassies - world franchise council
Contract
Ipo - sale - merger - draw cash out

19. Points negotiated in contract
Territory - opening dates - transfer fees - rights of first refusal and support
Talk to franchisees - ask for data on company stores - press releases - conference calls
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
Gross profit

20. 3 ways to ensure correct financial reporting
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
What is clearly expected of franchisee
Like new round of negotiations
...

21. Who can be a multiple stakeholder
Renew - close - convert to independent store
Low interest rates - low unemployment - good economy
Banks - suppliers - owners - and employees
Cashing out and maximizing value for stakeholders

22. Do 10 day and 5 day rule run separately
Inform and allow for comparisons
Net profit
Fdd
Yes - but they can run together

23. How to evaluate financial potential
Banks - suppliers - owners - and employees
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Top 100 cities - proactive not reactive - controlled growth strategy
Talk to franchisees - ask for data on company stores - press releases - conference calls

24. Not to franchise internationally

25. 10 day and 5 day rule
10 days to think about contract 5 days with completed contract
Like new round of negotiations
Contract
Master - single units - multiple - joint venture - company owned stores

26. Considerations for franchising
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
Yes - but they can run together

27. What does a good clear franchise agreement articulate?
15 years
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
Who can afford it - ability to operate your franchise - where they live
What is clearly expected of franchisee

28. What do franchisees earn money on
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Like new round of negotiations
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Net profit

29. What has replaced ufoc
Finances - experience - education
Fdd
Like new round of negotiations
Renew - close - convert to independent store

30. Successful sale
Low interest rates - low unemployment - good economy
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Top 100 cities - proactive not reactive - controlled growth strategy
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement