Question 1

The Uniform Franchise ________ requires a franchisor to make specific presale disclosures to prospective franchisees.

Accepted Answer

A)  Memorandum 
B)  Offering Circular 
C)  Disclosure Statement 
D)  Memorandum of Understanding 
E)  Acceptance Statement 
A)  Memorandum 
B)  Offering Circular 
C)  Disclosure Statement 
D)  Memorandum of Understanding 
E)  Acceptance Statement

Question 2

Which of the following is not one of the basic forms of a franchise?

Accepted Answer

A)  area 
B)  chain-style 
C)  processing plant 
D)  joint venture 
E)  distributorship 
A)  area 
B)  chain-style 
C)  processing plant 
D)  joint venture 
E)  distributorship

Question 3

Which of the following is not one of the fees typically found in a franchise agreement?

Accepted Answer

A)  initial license fee 
B)  royalty fee 
C)  assessment fee 
D)  lease fee 
E)  annual continuation fee 
A)  initial license fee 
B)  royalty fee 
C)  assessment fee 
D)  lease fee 
E)  annual continuation fee

Question 4

McDonald's does not grant exclusive geographical territories to its franchisees.

Accepted Answer

A) True 
 B)False

Question 5

A royalty fee is a fee for the continued use of the franchisor's trade name,property,and assistance that is often computed as a percentage of the franchisee's gross sales.

Accepted Answer

A) True 
 B)False

Question 6

Strategic alliances have the same protection as mergers,joint ventures,or franchising.

Accepted Answer

A) True 
 B)False

Question 7

You have started a very successful restaurant business,and now own thirteen profitable restaurants.Besides good food,the decor and ambience of your restaurants give them a distinct competitive advantage over other restaurants.Customers have approached you about opening up additional restaurants in other states.You do not want to affiliate with partners,nor do you want to spend considerable time traveling.Your attorney has suggested franchising,and guarantees that a contract can be written which protects the trade name,service marks and other particulars of your business.Your only concern is potential liability,should a franchisee's customer become injured or sick at a franchise.What is your liability exposure as a franchisor,and what can you as a franchisor do to protect yourself?

Accepted Answer

As a general rule,franchisors are not li

Question 8

Which of the following statements is true?

Accepted Answer

A)  Generally, the franchisor can terminate the franchisee's agreement at will. 
B)  Generally, the franchisor can terminate the franchisee's agreement at will, but only if the contract so provides. 
C)  Generally, the franchisor can terminate the franchisee's agreement, but only for a legitimate cause. 
D)  Many states have enacted laws requiring "just cause" before any franchise agreement can be terminated. 
E)  Franchises cannot be terminated without the consent of the franchisee. 
A)  Generally, the franchisor can terminate the franchisee's agreement at will. 
B)  Generally, the franchisor can terminate the franchisee's agreement at will, but only if the contract so provides. 
C)  Generally, the franchisor can terminate the franchisee's agreement, but only for a legitimate cause. 
D)  Many states have enacted laws requiring "just cause" before any franchise agreement can be terminated. 
E)  Franchises cannot be terminated without the consent of the franchisee.

Question 9

Termination-at-will clauses in franchise agreements are generally enforceable.

Accepted Answer

A) True 
 B)False

Question 10

A strategic alliance is an arrangement between two or more companies in the same industry in which they agree to ally themselves to accomplish a designated objective.

Accepted Answer

A) True 
 B)False

Question 11

A franchisor and franchisee who use the same trade name and trademarks and make no effort to inform the public of their separate legal status may find themselves in an "apparent agency" situation.

Accepted Answer

A) True 
 B)False

Question 12

Assessment fees are typically billed as a flat monthly or annual fee,or as a percentage of gross sales.

Accepted Answer

A) True 
 B)False

Question 13

Most franchise agreements contain an arbitration clause,which provides that any claim or controversy arising from the franchise agreement is subject to arbitration.

Accepted Answer

A) True 
 B)False

Question 14

The misappropriation of a franchisor's trade secret is called unfair competition.

Accepted Answer

A) True 
 B)False

Question 15

Tasty Corporation,located in Florida,developed a great mix for hot chocolate.Tasty Corporation wants to market the drink in various European markets.The company has concerns,however,about the laws of other countries,and cultural differences.Define the concept of strategic alliances and joint ventures,and whether forming such arrangements would be a good idea for Tasty Corporation.

Accepted Answer

A strategic alliance is an arrangement b

Question 16

Business owners considering a strategic alliance should not be concerned that a strategic alliance partner is a potential competitor,because that would breach the duty of loyalty.

Accepted Answer

A) True 
 B)False

Question 17

An assessment fee is a franchise fee for such things as advertising and promotional campaigns and administrative costs.

Accepted Answer

A) True 
 B)False

Question 18

The term franchise refers to both the agreement between the parties and the franchise outlet.

Accepted Answer

A) True 
 B)False

Question 19

Joint ventures resemble partnerships in that they are both usually formed to pursue ongoing business operations.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not typically covered in a franchise agreement?

Accepted Answer

A)  territory 
B)  licensing of intellectual property 
C)  required payments 
D)  quality control standards 
E)  confidential business plans 
A)  territory 
B)  licensing of intellectual property 
C)  required payments 
D)  quality control standards 
E)  confidential business plans

Exam 31: Franchise and Special Forms of Business

The Uniform Franchise ________ requires a franchisor to make specific presale disclosures to prospective franchisees.

Which of the following is not one of the basic forms of a franchise?

Which of the following is not one of the fees typically found in a franchise agreement?

McDonald's does not grant exclusive geographical territories to its franchisees.

A royalty fee is a fee for the continued use of the franchisor's trade name,property,and assistance that is often computed as a percentage of the franchisee's gross sales.

Strategic alliances have the same protection as mergers,joint ventures,or franchising.

Which of the following statements is true?

Termination-at-will clauses in franchise agreements are generally enforceable.

A strategic alliance is an arrangement between two or more companies in the same industry in which they agree to ally themselves to accomplish a designated objective.

A franchisor and franchisee who use the same trade name and trademarks and make no effort to inform the public of their separate legal status may find themselves in an "apparent agency" situation.

Assessment fees are typically billed as a flat monthly or annual fee,or as a percentage of gross sales.

Most franchise agreements contain an arbitration clause,which provides that any claim or controversy arising from the franchise agreement is subject to arbitration.

The misappropriation of a franchisor's trade secret is called unfair competition.

Business owners considering a strategic alliance should not be concerned that a strategic alliance partner is a potential competitor,because that would breach the duty of loyalty.

An assessment fee is a franchise fee for such things as advertising and promotional campaigns and administrative costs.

The term franchise refers to both the agreement between the parties and the franchise outlet.

Joint ventures resemble partnerships in that they are both usually formed to pursue ongoing business operations.

Which of the following is not typically covered in a franchise agreement?

Legal Heritage and the Information Age

Constitutional Law for Business and E-Commerce

Courts and Jurisdiction

Judicial, Alternative, Administrative, and E-Dispute Resolution

Torts and Strict Liability

Criminal Law and Cyber Crimes

Intellectual Property and Cyber Piracy

Ethics and Social Responsibility of Business

Nature of Traditional and E-Contracts

Agreement and Consideration

Capacity and Legality

Genuineness of Assent and Statute of Frauds

Third-Party Rights and Discharge

Breach of Contract and Remedies

Digital Law and E-Commerce

Formation of Sales, Lease, and E-Contracts

Performance of Sales, Leases and E-Contracts

Remedies for Breach of Sales and Lease Contracts

Warranties and Product Liability

Creation and Transfer of Negotiable Instruments

Holder in Due Course and Liability of Parties

Banking System, E-Money, and Financial Reform

Credit and Secured Transactions

Bankruptcy and Reorganization

Agency Law

Small Business, Entrepreneurship, and Partnerships

Corporate Formation and Financing

Corporate Governance and Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Company and Limited Liability Partnership

Investor Protection,E-Securities Transactions,and Wall Street Reform

Antitrust Law

Consumer Safety, Consumer Financial Protection, and Environmental Protection

Labor, Worker Protection, Employment, and Immigration Law

Equal Opportunity in Employment

Personal Property, Bailment, and Insurance

Real Property, Landlord-Tenant Law, and Land Use Regulation

Family Law, Wills, and Trusts

Accountants' Liability

International and World Trade Law

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