Question 1

Over-extensive covenants not to compete are nevertheless enforceable if they are included in franchise agreements.

Accepted Answer

A) True 
 B)False

Question 2

The federal agency that covers franchises and enforces franchise law at the federal level is the:

Accepted Answer

A)  Interstate Commerce Commission. 
B)  Justice Department. 
C)  Federal Trade Commission. 
D)  Patent and Trademark Office. 
E)  Federal Franchise Commission. 
A)  Interstate Commerce Commission. 
B)  Justice Department. 
C)  Federal Trade Commission. 
D)  Patent and Trademark Office. 
E)  Federal Franchise Commission.

Question 3

Classy Antique Motels is a chain of older motels most of which were originally built in the 1950s and 1960s.The idea is to distinguish these older motels from the many older motels that have become "run-down" or "seedy." Each motel retains it original name and sign,but has an additional sign that says,"Member of Classy Antique Motels." One of the chain's slogans is,"Stay at original motels,often with the original owners." The franchisor provides group marketing and management assistance in exchange for an initial fee to become part of the chain,and a continuing fee based on gross revenues.One of the franchisee motel owners allowed the conditions at his motel to deteriorate to the point that it is now a popular location for illicit drug transactions.A guest was injured from gunfire arising out of a drug deal at the motel.Can the guest recover from the franchisor?

Accepted Answer

A)  yes, because franchisors are generally liable for the torts of franchisees 
B)  yes, because each motel is an actual agent of the franchisor 
C)  yes, because the motel is the apparent agent of the franchisor 
D)  no, because the conduct in this situation does not create an agency arrangement 
E)  no, because franchisors cannot be held liable for a franchisee's tort, unless the franchisor actively participated in the tort 
A)  yes, because franchisors are generally liable for the torts of franchisees 
B)  yes, because each motel is an actual agent of the franchisor 
C)  yes, because the motel is the apparent agent of the franchisor 
D)  no, because the conduct in this situation does not create an agency arrangement 
E)  no, because franchisors cannot be held liable for a franchisee's tort, unless the franchisor actively participated in the tort

Question 4

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

Accepted Answer

A)  covenant not to compete 
B)  arbitration clause 
C)  duration 
D)  licensing of intellectual property 
E)  franchisee's personal and business credit history 
A)  covenant not to compete 
B)  arbitration clause 
C)  duration 
D)  licensing of intellectual property 
E)  franchisee's personal and business credit history

Question 5

The misappropriation of a trade secret is called ________.

Accepted Answer

A)  bad faith 
B)  fraud 
C)  unfair competition 
D)  misdealing 
E)  dilution 
A)  bad faith 
B)  fraud 
C)  unfair competition 
D)  misdealing 
E)  dilution

Question 6

The parties participating in a joint venture have the right to engage in the management of the joint venture,based upon the amount of their capital contributions.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements best describes the government's regulation of franchisor activities in seeking franchisees?

Accepted Answer

A)  There is very little regulation and oversight of these activities. 
B)  There are very few regulations directed specifically at franchisors, because other regulations address potential problems in this area. 
C)  These activities are heavily regulated, with laws at both the state and federal levels. 
D)  These activities are heavily regulated, but only at the state level, because most franchising activities cross state lines. 
E)  These activities are heavily regulated, but only at the federal level, because of concerns with uniformity. 
A)  There is very little regulation and oversight of these activities. 
B)  There are very few regulations directed specifically at franchisors, because other regulations address potential problems in this area. 
C)  These activities are heavily regulated, with laws at both the state and federal levels. 
D)  These activities are heavily regulated, but only at the state level, because most franchising activities cross state lines. 
E)  These activities are heavily regulated, but only at the federal level, because of concerns with uniformity.

Question 8

A franchise is established when one party,the franchisor,licenses another party,the franchisee,to use the franchisor's trade name,trademarks,commercial symbols,patents,copyrights,and other property in the distribution and selling of goods and services.

Accepted Answer

A) True 
 B)False

Question 9

If a franchisee is the actual or apparent agent of the franchisor,the franchisor is responsible for the torts and contracts the franchisee committed or entered into within the scope of the agency.

Accepted Answer

A) True 
 B)False

Question 10

Anyone who uses a mark without authorization may be sued for trademark ________.

Accepted Answer

A)  interruption 
B)  harassment 
C)  conversion 
D)  infringement 
E)  diminution 
A)  interruption 
B)  harassment 
C)  conversion 
D)  infringement 
E)  diminution

Question 11

Franchise agreements normally require fees to be paid by the franchisee to the franchisor before the start of the franchisee's operations,but not after the business is underway.

Accepted Answer

A) True 
 B)False

Question 12

In which type of franchise does the franchisor license the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory?

Accepted Answer

A)  distributorship 
B)  processing plant 
C)  re-servicing 
D)  chain-style 
E)  area 
A)  distributorship 
B)  processing plant 
C)  re-servicing 
D)  chain-style 
E)  area

Question 13

Franchises can be used for which types of businesses?

Accepted Answer

A)  services 
B)  goods 
C)  goods and/or services 
D)  goods and services, but only for services if the services are connected with a particular good 
E)  services and goods, but only for goods if a "secret formula" is connected with a particular good 
A)  services 
B)  goods 
C)  goods and/or services 
D)  goods and services, but only for services if the services are connected with a particular good 
E)  services and goods, but only for goods if a "secret formula" is connected with a particular good

Question 14

Parties enter into licensing agreements through contracts.

Accepted Answer

A) True 
 B)False

Question 15

Joint ventures are never an available option for international expansion because of the complexities involved in transacting international business.

Accepted Answer

A) True 
 B)False

Question 16

A franchisor's ability to maintain the public's perception of the quality of the goods and services associated with its trade name,trademarks,and service marks is the essence of its success.

Accepted Answer

A) True 
 B)False

Question 17

Covenants not to compete prohibit franchisees from competing with the franchisor during a specific time and in a specified area after the termination of the franchise.

Accepted Answer

A) True 
 B)False

Question 18

The ________ Trademark Act provides for the registration of trademarks and service marks with the United States Patent and Trademark Office (USPTO)in ________.

Accepted Answer

A)  Lloyd; New York, New York 
B)  Lanham; New York, New York 
C)  Lloyd; Washington, D.C. 
D)  Lanham; Washington, D.C. 
E)  Landrum; Chicago, Illinois 
A)  Lloyd; New York, New York 
B)  Lanham; New York, New York 
C)  Lloyd; Washington, D.C. 
D)  Lanham; Washington, D.C. 
E)  Landrum; Chicago, Illinois

Question 19

Strategic alliances are often used by companies to enter a foreign market.

Accepted Answer

A) True 
 B)False

Question 20

An initial license fee is a(n)________ payment for the privilege of being granted a franchise.

Accepted Answer

A)  lump-sum 
B)  periodic 
C)  in-kind 
D)  credit 
E)  installment 
A)  lump-sum 
B)  periodic 
C)  in-kind 
D)  credit 
E)  installment

Exam 31: Franchise and Special Forms of Business

Over-extensive covenants not to compete are nevertheless enforceable if they are included in franchise agreements.

The federal agency that covers franchises and enforces franchise law at the federal level is the:

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

The misappropriation of a trade secret is called ________.

The parties participating in a joint venture have the right to engage in the management of the joint venture,based upon the amount of their capital contributions.

Which of the following statements best describes the government's regulation of franchisor activities in seeking franchisees?

A franchise is established when one party,the franchisor,licenses another party,the franchisee,to use the franchisor's trade name,trademarks,commercial symbols,patents,copyrights,and other property in the distribution and selling of goods and services.

If a franchisee is the actual or apparent agent of the franchisor,the franchisor is responsible for the torts and contracts the franchisee committed or entered into within the scope of the agency.

Anyone who uses a mark without authorization may be sued for trademark ________.

Franchise agreements normally require fees to be paid by the franchisee to the franchisor before the start of the franchisee's operations,but not after the business is underway.

In which type of franchise does the franchisor license the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory?

Franchises can be used for which types of businesses?

Parties enter into licensing agreements through contracts.

Joint ventures are never an available option for international expansion because of the complexities involved in transacting international business.

A franchisor's ability to maintain the public's perception of the quality of the goods and services associated with its trade name,trademarks,and service marks is the essence of its success.

Covenants not to compete prohibit franchisees from competing with the franchisor during a specific time and in a specified area after the termination of the franchise.

The ________ Trademark Act provides for the registration of trademarks and service marks with the United States Patent and Trademark Office (USPTO)in ________.

Strategic alliances are often used by companies to enter a foreign market.

An initial license fee is a(n)________ payment for the privilege of being granted a franchise.

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

Filters

The Trademark Act provides for the registration of trademarks and service marks with the United States Patent and Trademark Office (USPTO)in .