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. Successful sale
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
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Top 100 cities - proactive not reactive - controlled growth strategy

2. 5 considerations prior to franchising internationally
Like new round of negotiations
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
Master - single units - multiple - joint venture - company owned stores

3. What has replaced ufoc
Fdd
Inform and allow for comparisons
Trade missions - trade shows - embassies - world franchise council
What is clearly expected of franchisee

4. Evaluate potential franchisees
Finances - experience - education
Top 100 cities - proactive not reactive - controlled growth strategy
Yes - but they can run together
Low interest rates - low unemployment - good economy

5. What do franchisees earn money on
Ipo - sale - merger - draw cash out
15 years
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Net profit

6. 4 items on cover page
Finances - experience - education
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Banks - suppliers - owners - and employees
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

7. 3 ways to ensure correct financial reporting
Renew - close - convert to independent store
Master - single units - multiple - joint venture - company owned stores
...
Ipo - sale - merger - draw cash out

8. Considerations for franchising
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Banks - suppliers - owners - and employees
Renew - close - convert to independent store
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

9. Where to grow franchise
Top 100 cities - proactive not reactive - controlled growth strategy
Cashing out and maximizing value for stakeholders
Finances - experience - education
Low interest rates - low unemployment - good economy

10. Options when agreement ends
What is clearly expected of franchisee
10 days to think about contract 5 days with completed contract
Renew - close - convert to independent store
Trade missions - trade shows - embassies - world franchise council

11. 10 day and 5 day rule
10 days to think about contract 5 days with completed contract
Fdd
Low interest rates - low unemployment - good economy
What is clearly expected of franchisee

12. Average length of franchise agreement
Gross profit
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Like new round of negotiations
15 years

13. Goal of harvesting
Gross profit
Cashing out and maximizing value for stakeholders
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

14. Who can be a multiple stakeholder
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
Fdd
15 years

15. Do 10 day and 5 day rule run separately
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Yes - but they can run together
...
Cashing out and maximizing value for stakeholders

16. Points negotiated in contract
Banks - suppliers - owners - and employees
Ipo - sale - merger - draw cash out
Finances - experience - education
Territory - opening dates - transfer fees - rights of first refusal and support

17. Typical ways harvesting occurs
Gross profit
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Ipo - sale - merger - draw cash out
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement

18. Approach agreement renewal
15 years
Like new round of negotiations
Deliver business system - signage - products - taught - good product - geographical acceptance
Inform and allow for comparisons

19. Profile 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
Finances - experience - education
Gross profit

20. Purpose of ufoc/fdd
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
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
Inform and allow for comparisons

21. Time good or bad to sell
Talk to franchisees - ask for data on company stores - press releases - conference calls
Renew - close - convert to independent store
Trade missions - trade shows - embassies - world franchise council
Low interest rates - low unemployment - good economy

22. How to evaluate financial potential
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.
Net profit
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

23. 6 ways to structure international franchise system
Trade missions - trade shows - embassies - world franchise council
Renew - close - convert to independent store
Master - single units - multiple - joint venture - company owned stores
Gross profit

24. Not to franchise internationally

25. What do franchisors earn his money on?
Contract
Low interest rates - low unemployment - good economy
Gross profit
15 years

26. What does a good clear franchise agreement articulate?
What is clearly expected of franchisee
Gross profit
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Inform and allow for comparisons

27. What governs franchisee/franchisor relationship
Fdd
Deliver business system - signage - products - taught - good product - geographical acceptance
Contract
Net profit

28. How do you find right partner
Inform and allow for comparisons
Trade missions - trade shows - embassies - world franchise council
Yes - but they can run together
Like new round of negotiations

29. What makes a business replicable
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Banks - suppliers - owners - and employees
Ipo - sale - merger - draw cash out
Deliver business system - signage - products - taught - good product - geographical acceptance

30. Key items that go into valuing
Ipo - sale - merger - draw cash out
15 years
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
What is clearly expected of franchisee