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 to evaluate financial potential
Trade missions - trade shows - embassies - world franchise council
Talk to franchisees - ask for data on company stores - press releases - conference calls
What is clearly expected of franchisee
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

2. Considerations for franchising
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
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
10 days to think about contract 5 days with completed contract

3. What makes a business replicable
Finances - experience - education
Yes - but they can run together
Territory - opening dates - transfer fees - rights of first refusal and support
Deliver business system - signage - products - taught - good product - geographical acceptance

4. Where to grow franchise
Top 100 cities - proactive not reactive - controlled growth strategy
Yes - but they can run together
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
...

5. Key items that go into valuing
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Fdd
Banks - suppliers - owners - and employees

6. Purpose of ufoc/fdd
Who can afford it - ability to operate your franchise - where they live
Inform and allow for comparisons
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Yes - but they can run together

7. 5 considerations prior to franchising internationally
15 years
Territory - opening dates - transfer fees - rights of first refusal and support
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

8. Goal of harvesting
Yes - but they can run together
Trade missions - trade shows - embassies - world franchise council
Net profit
Cashing out and maximizing value for stakeholders

9. What do franchisees earn money on
Talk to franchisees - ask for data on company stores - press releases - conference calls
Fdd
Net profit
Renew - close - convert to independent store

10. Average length of franchise agreement
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
...
Top 100 cities - proactive not reactive - controlled growth strategy
15 years

11. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
10 days to think about contract 5 days with completed contract
Yes - but they can run together
Fdd

12. Points negotiated in contract
Low interest rates - low unemployment - good economy
15 years
Territory - opening dates - transfer fees - rights of first refusal and support
Fdd

13. Not to franchise internationally

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14. Successful sale
Yes - but they can run together
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Territory - opening dates - transfer fees - rights of first refusal and support
Trade missions - trade shows - embassies - world franchise council

15. 6 ways to structure international franchise system
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
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Like new round of negotiations
Master - single units - multiple - joint venture - company owned stores

16. Typical ways harvesting occurs
Banks - suppliers - owners - and employees
Who can afford it - ability to operate your franchise - where they live
Ipo - sale - merger - draw cash out
Contract

17. Evaluate potential franchisees
Cashing out and maximizing value for stakeholders
15 years
Like new round of negotiations
Finances - experience - education

18. Who can be a multiple stakeholder
What is clearly expected of franchisee
Banks - suppliers - owners - and employees
Top 100 cities - proactive not reactive - controlled growth strategy
Low interest rates - low unemployment - good economy

19. What governs franchisee/franchisor relationship
Contract
Banks - suppliers - owners - and employees
15 years
Inform and allow for comparisons

20. How do you find right partner
What is clearly expected of franchisee
Fdd
Talk to franchisees - ask for data on company stores - press releases - conference calls
Trade missions - trade shows - embassies - world franchise council

21. 3 ways to ensure correct financial reporting
10 days to think about contract 5 days with completed contract
Fdd
...
Inform and allow for comparisons

22. 4 items on cover page
...
Net profit
Like new round of negotiations
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time

23. What do franchisors earn his money on?
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Gross profit
Who can afford it - ability to operate your franchise - where they live
Deliver business system - signage - products - taught - good product - geographical acceptance

24. Time good or bad to sell
Trade missions - trade shows - embassies - world franchise council
Gross profit
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Low interest rates - low unemployment - good economy

25. What has replaced ufoc
What is clearly expected of franchisee
Fdd
Yes - but they can run together
Deliver business system - signage - products - taught - good product - geographical acceptance

26. Do 10 day and 5 day rule run separately
Low interest rates - low unemployment - good economy
Trade missions - trade shows - embassies - world franchise council
Yes - but they can run together
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

27. 10 day and 5 day rule
Territory - opening dates - transfer fees - rights of first refusal and support
10 days to think about contract 5 days with completed contract
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

28. What does a good clear franchise agreement articulate?
What is clearly expected of franchisee
Banks - suppliers - owners - and employees
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

29. Approach agreement renewal
Net profit
Like new round of negotiations
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
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

30. Options when agreement ends
Renew - close - convert to independent store
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
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