Question 1

Anyone who uses a franchisor's mark without authorization may be sued for negligence.

Accepted Answer

A) True 
 B)False

Question 2

In a "chain-link" franchise,the franchisor licenses 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) True 
 B)False

Question 3

The rule requiring franchisors to make full presale disclosures to prospective franchisees is called the:

Accepted Answer

A)  interstate franchise rule. 
B)  Federal Trade Commission franchise rule. 
C)  federal disclosure rule. 
D)  justice disclosure rule. 
E)  intrastate franchise rule. 
A)  interstate franchise rule. 
B)  Federal Trade Commission franchise rule. 
C)  federal disclosure rule. 
D)  justice disclosure rule. 
E)  intrastate franchise rule.

Question 4

Under the Federal Trade Commission "franchise rule," a franchisor may make sales projections for a potential franchisee based on sales of an existing franchise,but not on sales of a hypothetical franchise.

Accepted Answer

A) True 
 B)False

Question 5

An "area" franchise licenses the franchisee to make and sell its products to the public from a retail outlet serving an exclusive geographical territory.

Accepted Answer

A) True 
 B)False

Question 6

Franchise agreements do not usually have much room for negotiation.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following best describes a franchise?

Accepted Answer

A)  two parties work together on a limited-duration project or enterprise 
B)  a business establishes numerous retail locations, owned by the business, that all offer similar products or services 
C)  a retailer pays a fee to operate a business using a particular name under a standardized general business plan, with the fee often being paid in the form of royalties 
D)  a seller of products is in business long enough for its trade name to become widely-recognized 
E)  a business obtains the right from another business to operate with limited liability 
A)  two parties work together on a limited-duration project or enterprise 
B)  a business establishes numerous retail locations, owned by the business, that all offer similar products or services 
C)  a retailer pays a fee to operate a business using a particular name under a standardized general business plan, with the fee often being paid in the form of royalties 
D)  a seller of products is in business long enough for its trade name to become widely-recognized 
E)  a business obtains the right from another business to operate with limited liability

Question 8

A franchise arrangement is typically used in a situation where there is no trademark or other intellectual property owned by the franchisor.

Accepted Answer

A) True 
 B)False

Question 9

How is an assessment fee billed?

Accepted Answer

A)  as a flat quarterly fee 
B)  as a flat monthly fee 
C)  as a flat annual fee 
D)  as a percentage of gross sales 
E)  either as a flat monthly or annual fee, or as a percentage of gross sales 
A)  as a flat quarterly fee 
B)  as a flat monthly fee 
C)  as a flat annual fee 
D)  as a percentage of gross sales 
E)  either as a flat monthly or annual fee, or as a percentage of gross sales

Exam 31: Franchise and Special Forms of Business

Anyone who uses a franchisor's mark without authorization may be sued for negligence.

In a "chain-link" franchise,the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory.

The rule requiring franchisors to make full presale disclosures to prospective franchisees is called the:

Under the Federal Trade Commission "franchise rule," a franchisor may make sales projections for a potential franchisee based on sales of an existing franchise,but not on sales of a hypothetical franchise.

An "area" franchise licenses the franchisee to make and sell its products to the public from a retail outlet serving an exclusive geographical territory.

Franchise agreements do not usually have much room for negotiation.

Which of the following best describes a franchise?

A franchise arrangement is typically used in a situation where there is no trademark or other intellectual property owned by the franchisor.

How is an assessment fee billed?

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