Exam 31: Franchise and Special Forms of Business

Maurice is interested in operating an internet company in China.Maurice is aware,however,that the Chinese government has prohibited complete ownership of internet companies in China by foreigners.Additionally,the Chinese "connections" method of conducting business is a hurdle.What would be a good way for Maurice to access this market?

Over ________ franchise outlets in the United States account for over ________ percent of retail sales and about ________ percent of the nation's gross domestic product.

Generally,a single failure to meet a quality control standard is not cause for termination of a franchise.

The holder of a trade secret can sue the offending party for damages and obtain a(n)________ to prohibit further unauthorized use of the trade secret.

The franchise ________ often includes detailed information about the prospective franchisee's previous employment,financial and educational history,and credit status.

Louie opened a very successful restaurant,Louie's Luscious Liver Livery,which serves liver twenty-five different ways.Louie has decided to franchise his business concept,but he is worried that franchisees might not meet his standards.Thus,Louie has drafted comprehensive provisions giving him broad powers to terminate any franchises.There is an extensive list of specific grounds that will allow Louie to terminate the franchise.Further,one clause says Louie can terminate a franchise if "in Louie's sole subjective opinion,the owner and/or the franchisee restaurant does not properly project the franchisor's overall image." Discuss these provisions.

In which type of franchise does the franchisee grant franchises or licenses to others?

Licensing is an important business arrangement in both domestic and international markets.

Mike is considering opening a barbecue restaurant.He can either design his own,or obtain a franchise for a Bubba's Roadkill Barbecue House (which does not actually serve roadkill!)What factors should Mike consider in deciding which course of action to take?

An initial license fee is a periodic payment for the privilege of being granted a franchise.

Franchises may be granted to sell and distribute products,but not to perform services.

Generally,neither the franchisor nor the franchisee is liable for the contracts or torts of the other.

To prevent unjust enrichment,courts occasionally enforce oral franchise agreements that violate the Statute of Frauds.

Soda Corporation developed a great tasting lemon-lime drink called Zoom.Soda Corporation grants franchises whereby franchisees keep their own name,but they may display a sign advertising that they offer Zoom soda,and franchisees are provided with mixing instructions for the drink.Big Burger owned one of the franchises.A customer at the franchise spilled a cup of Zoom on the floor.An hour later,another customer slipped and fell.The injured customer sued both Big Burger and Soda Corporation.Discuss whether the injured customer will likely be able to recover against Soda Corporation.

Which of the following describes a licensing agreement?

Although some states permit oral franchise agreements,most have enacted Statutes of Frauds that require franchise agreements to be in writing.

A strategic alliance allows participating companies to reduce risks,share costs,combine technologies,and extend their markets.

Mere use of the same name does not automatically make a franchisor liable for the franchisee's actions.

In a processing plant franchise,the franchisor provides a secret formula or the like to the franchisee; the franchisee then manufactures the product at its own location and distributes it to retail dealers.

The Federal Trade Commission requires the registration of the disclosure document prior to its use.