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. 10 day and 5 day rule
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
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
10 days to think about contract 5 days with completed contract

2. What governs franchisee/franchisor relationship
Cashing out and maximizing value for stakeholders
Contract
Net profit
Fdd

3. Do 10 day and 5 day rule run separately
Top 100 cities - proactive not reactive - controlled growth strategy
Contract
Yes - but they can run together
Deliver business system - signage - products - taught - good product - geographical acceptance

4. 5 considerations prior to franchising internationally
What is clearly expected of franchisee
Ipo - sale - merger - draw cash out
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources
Inform and allow for comparisons

5. What do franchisees earn money on
Master - single units - multiple - joint venture - company owned stores
Fdd
Renew - close - convert to independent store
Net profit

6. Average length of franchise agreement
Net profit
15 years
Low interest rates - low unemployment - good economy
What is clearly expected of franchisee

7. How to evaluate financial potential
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
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Fdd

8. Where to grow franchise
Top 100 cities - proactive not reactive - controlled growth strategy
...
Finances - experience - education
Conviction - know laws - tax rates - can you bring products in and out - cost and availability of resources

9. How do you find right partner
Trade missions - trade shows - embassies - world franchise council
Fdd
What is clearly expected of franchisee
Ipo - sale - merger - draw cash out

10. Approach agreement renewal
Like new round of negotiations
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Renew - close - convert to independent store

11. Who can be a multiple stakeholder
Banks - suppliers - owners - and employees
Trade missions - trade shows - embassies - world franchise council
Low interest rates - low unemployment - good economy
Inform and allow for comparisons

12. Time good or bad to sell
What is clearly expected of franchisee
Fdd
Trade missions - trade shows - embassies - world franchise council
Low interest rates - low unemployment - good economy

13. Options when agreement ends
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Gross profit
Renew - close - convert to independent store
Net profit

14. 3 ways to ensure correct financial reporting
...
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Banks - suppliers - owners - and employees
Like new round of negotiations

15. Typical ways harvesting occurs
Yes - but they can run together
Ipo - sale - merger - draw cash out
Who can afford it - ability to operate your franchise - where they live
Master - single units - multiple - joint venture - company owned stores

16. 6 ways to structure international franchise system
Master - single units - multiple - joint venture - company owned stores
Top 100 cities - proactive not reactive - controlled growth strategy
Low interest rates - low unemployment - good economy
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.

17. 4 items on cover page
10 days to think about contract 5 days with completed contract
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.
Net profit

18. Considerations for franchising
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
Trade missions - trade shows - embassies - world franchise council
Banks - suppliers - owners - and employees
10 days to think about contract 5 days with completed contract

19. Points negotiated in contract
Territory - opening dates - transfer fees - rights of first refusal and support
Top 100 cities - proactive not reactive - controlled growth strategy
Trade missions - trade shows - embassies - world franchise council
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

20. What does a good clear franchise agreement articulate?
What is clearly expected of franchisee
Only one offering/selling it - replicable - make $ - support fee structure - prototype - history - comp.
...
Banks - suppliers - owners - and employees

21. Goal of harvesting
Contract
10 days to think about contract 5 days with completed contract
Banks - suppliers - owners - and employees
Cashing out and maximizing value for stakeholders

22. What has replaced ufoc
Fdd
Who can afford it - ability to operate your franchise - where they live
Yes - but they can run together
Contract

23. Evaluate potential franchisees
Finances - experience - education
Trade missions - trade shows - embassies - world franchise council
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info
Gross profit

24. Key items that go into valuing
Cashing out and maximizing value for stakeholders
Financials-profit - cash flow - ebidta - state of industry and market area - length of remaining on franchise agreement
Contract
Territory - opening dates - transfer fees - rights of first refusal and support

25. Successful sale
Ftc has not reviewed the document - consult lawyer - read entire doc. - and take time
Renew - close - convert to independent store
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

26. Purpose of ufoc/fdd
Banks - suppliers - owners - and employees
Inform and allow for comparisons
Talk to franchisees - ask for data on company stores - press releases - conference calls
Good clean financials - employee records - supplier contracts - franchise agreement - market date - legal info

27. What makes a business replicable
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
Contract
Deliver business system - signage - products - taught - good product - geographical acceptance
Like new round of negotiations

28. What do franchisors earn his money on?
15 years
Gross profit
Renew - close - convert to independent store
Trade missions - trade shows - embassies - world franchise council

29. Profile of franchisee
Who can afford it - ability to operate your franchise - where they live
Inform and allow for comparisons
Low interest rates - low unemployment - good economy
Finances - experience - education

30. Not to franchise internationally