Question 1

A franchisee is established when parties of a general partnership conduct business outside the state of their incorporation.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is an instance of an area franchise?

Accepted Answer

A) McDonald's franchises an independently owned restaurant to make and sell its products in Pennsylvania. 
B) Pepsi Co.ships Pepsi in the form of a drink concentrate which is prepared and bottled locally in Canada. 
C) Nokia licenses a retail dealer to retail its products in Jacksonville. 
D) Burger King wants to start operating in Mexico and hires a Mexican subfranchisor to sell the franchise on behalf of Burger King. 
A) McDonald's franchises an independently owned restaurant to make and sell its products in Pennsylvania. 
B) Pepsi Co.ships Pepsi in the form of a drink concentrate which is prepared and bottled locally in Canada. 
C) Nokia licenses a retail dealer to retail its products in Jacksonville. 
D) Burger King wants to start operating in Mexico and hires a Mexican subfranchisor to sell the franchise on behalf of Burger King. D

Question 3

Which of the following is true of a franchise agreement?

Accepted Answer

A) A franchise application is not necessary to qualify for entering into a franchise agreement. 
B) The UFOC sets forth the terms and conditions for the franchise agreement. 
C) The terms and conditions of the franchise agreement must always be first drawn by the franchisee. 
D) A franchisee can only obtain a license to use the franchisor's intellectual property after entering into a franchise agreement. 
A) A franchise application is not necessary to qualify for entering into a franchise agreement. 
B) The UFOC sets forth the terms and conditions for the franchise agreement. 
C) The terms and conditions of the franchise agreement must always be first drawn by the franchisee. 
D) A franchisee can only obtain a license to use the franchisor's intellectual property after entering into a franchise agreement. D

Question 4

________ is a business arrangement that occurs when the owner of intellectual property contracts to permit another party to use the intellectual property.

Accepted Answer

A) General partnership 
B) Leasing 
C) Licensing 
D) Joint venturing 
A) General partnership 
B) Leasing 
C) Licensing 
D) Joint venturing

Question 5

Limonelle Corporation owns the secret formula for a popular beverage brand Limonelle.The corporation operates through franchises in over 50 countries.It uses a secret formula to prepare the drink concentrate which is dispatched to the franchises world over.These franchises then prepare and bottle the beverage for distribution.Which of these types of franchises has Limonelle adopted?

Accepted Answer

A) chain-style franchise 
B) processing plant franchise 
C) distributorship franchise 
D) area franchise 
A) chain-style franchise 
B) processing plant franchise 
C) distributorship franchise 
D) area franchise

Question 6

Which of the following is true of a strategic alliance?

Accepted Answer

A) Strategic alliances cannot have more than two entities involved. 
B) Strategic alliances cannot be formed between fellow competitors. 
C) Strategic alliances are usually formed to accomplish multiple business ventures. 
D) Strategic alliances do not provide the same protection and stability as mergers. 
A) Strategic alliances cannot have more than two entities involved. 
B) Strategic alliances cannot be formed between fellow competitors. 
C) Strategic alliances are usually formed to accomplish multiple business ventures. 
D) Strategic alliances do not provide the same protection and stability as mergers.

Question 7

What are the steps a prospective franchisee must take in order to acquire a franchise? What properties are generally licensed by franchisors?

Accepted Answer

A prospective franchisee must apply to t

Question 8

The termination-at-will clause allows franchisees to sue a franchisor in case of an unjust termination of franchise.

Accepted Answer

A) True 
 B)False

Question 9

In an area franchise, the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor.

Accepted Answer

A) True 
 B)False

Question 10

When is a franchisor allowed to terminate a franchise? Why are termination-at-will clauses generally held to be void?

Accepted Answer

Most franchise agreements permit a franc

Question 11

Concreate Development requires architects to design its latest venture-a 64-storeyed skyscraper.It makes a business arrangement with Excellent Architecture and acquires four architects on contract for the ongoing project.This is an instance of a(n)________.

Accepted Answer

A) licensing arrangement 
B) franchise 
C) limited partnership 
D) joint venture 
A) licensing arrangement 
B) franchise 
C) limited partnership 
D) joint venture

Question 12

The FTC does not require the registration of the disclosure document with the FTC prior to its use.

Accepted Answer

A) True 
 B)False

Question 13

The franchisor is liable for the contracts entered into and torts committed by the franchisee while the franchisee is acting within the scope of the apparent agency.

Accepted Answer

A) True 
 B)False

Question 14

Joint venturers generally have equal rights to manage a joint venture.

Accepted Answer

A) True 
 B)False

Question 15

A single failure by a franchise to meet a quality-control standard is sufficient cause for termination.

Accepted Answer

A) True 
 B)False

Question 16

Joint venturers are permitted to create a corporation that operates the joint venture.

Accepted Answer

A) True 
 B)False

Question 17

A franchise is an example of a license.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is imposed upon a franchisor that violates the FTC franchise disclosure rule?

Accepted Answer

A) FTC criminal action on behalf of the franchisee 
B) loss of intellectual property to the franchisee 
C) suspension of all business operations in the area 
D) an injunction against further franchise sales 
A) FTC criminal action on behalf of the franchisee 
B) loss of intellectual property to the franchisee 
C) suspension of all business operations in the area 
D) an injunction against further franchise sales

Question 19

Ubiquitous Enterprises is a franchisee of HotPan chain of restaurants.One afternoon, Linda, an employee of a HotPan restaurant owned by the franchisee is mopping the floor.Gary, a customer who enters the restaurant is talking on his cell phone and does not notice Linda mopping the floor.He slips on the wet floor while walking to the counter and is injured.Who among the following is liable for Gary's injuries?

Accepted Answer

A) HotPan, for not providing a "Caution: Wet Floor!" sign 
B) Ubiquitous Enterprises, for not having its own "Caution" sign 
C) Linda, for not alerting Gary 
D) Gary, for not noticing that the floor was wet 
A) HotPan, for not providing a "Caution: Wet Floor!" sign 
B) Ubiquitous Enterprises, for not having its own "Caution" sign 
C) Linda, for not alerting Gary 
D) Gary, for not noticing that the floor was wet

Question 20

Trade secrets do not qualify for copyright protection.

Accepted Answer

A) True 
 B)False

Exam 40: Franchises and Special Forms of Businesses

A franchisee is established when parties of a general partnership conduct business outside the state of their incorporation.

Which of the following is an instance of an area franchise?

Which of the following is true of a franchise agreement?

________ is a business arrangement that occurs when the owner of intellectual property contracts to permit another party to use the intellectual property.

Which of the following is true of a strategic alliance?

What are the steps a prospective franchisee must take in order to acquire a franchise? What properties are generally licensed by franchisors?

The termination-at-will clause allows franchisees to sue a franchisor in case of an unjust termination of franchise.

In an area franchise, the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor.

When is a franchisor allowed to terminate a franchise? Why are termination-at-will clauses generally held to be void?

Concreate Development requires architects to design its latest venture-a 64-storeyed skyscraper.It makes a business arrangement with Excellent Architecture and acquires four architects on contract for the ongoing project.This is an instance of a(n)________.

The FTC does not require the registration of the disclosure document with the FTC prior to its use.

The franchisor is liable for the contracts entered into and torts committed by the franchisee while the franchisee is acting within the scope of the apparent agency.

Joint venturers generally have equal rights to manage a joint venture.

A single failure by a franchise to meet a quality-control standard is sufficient cause for termination.

Joint venturers are permitted to create a corporation that operates the joint venture.

A franchise is an example of a license.

Which of the following is imposed upon a franchisor that violates the FTC franchise disclosure rule?

Trade secrets do not qualify for copyright protection.

Legal Heritage and the Digital Age

Courts and Jurisdiction

Judicial,Alternative,and E-Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Product and Strict Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crimes

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

E-Commerce and Digital Law

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties

Creation of Negotiable Instruments

Holder in Due Course and Transferability

Liability, Defenses, and Discharge

Banks, E-Money, and Financial Reform

Credit,Mortgages,and Debtor's Rights

Secured Transactions and E-Filing

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, Agents, and Independent Contractors

Employment, Worker Protection, and Immigration Law

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Business, Entrepreneurship, and General Partnerships

Limited Partnerships and Special Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Investor Protection, E-Securities, and Wall Street Reform

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection

Antitrust Law and Unfair Trade Practices

Personal Property and Bailment

Real Property

Landlord-Tenant Law and Land Use Regulation

Insurance

Accountants' Duties and Liability

Wills Trusts and Estates

Family Law

International and World Trade Law

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