Question 1

Which of the following documents sets forth the terms and conditions of a franchise?

Accepted Answer

A) the FTC disclosure document 
B) the franchise agreement 
C) the articles of incorporation 
D) the articles of organization 
A) the FTC disclosure document 
B) the franchise agreement 
C) the articles of incorporation 
D) the articles of organization

Question 2

Which of the following is true of a joint venture?

Accepted Answer

A) The parties to a joint venture are considered as limited partners. 
B) Both parties to a joint venture have equal rights to manage the venture. 
C) A joint venture is a partnership that lasts for multiple projects. 
D) Parties to a joint venture are exempt from fiduciary duties to each other. 
A) The parties to a joint venture are considered as limited partners. 
B) Both parties to a joint venture have equal rights to manage the venture. 
C) A joint venture is a partnership that lasts for multiple projects. 
D) Parties to a joint venture are exempt from fiduciary duties to each other.

Question 3

Which of the following federal agencies is empowered to enforce federal franchising rules?

Accepted Answer

A) the Federal Trade Commission (FT
C)  
B) the Securities and Exchange Commission (SE
C)  
C) the Federal Communications Commission (FC
C)  
D) the Commodity Futures Trading Commission (CFT
C)  
A) the Federal Trade Commission (FT
C)  
B) the Securities and Exchange Commission (SE
C)  
C) the Federal Communications Commission (FC
C)  
D) the Commodity Futures Trading Commission (CFT
C)

Question 4

A joint venture is an arrangement in which two or more business entities combine their resources to pursue an ongoing business operation.

Accepted Answer

A) True 
 B)False

Question 5

Uniform Franchise Offering Circular refers to a uniform disclosure document that requires a franchisor to make specific presale disclosures to prospective franchisees.

Accepted Answer

A) True 
 B)False

Question 6

A franchisee subject to wrongful termination can only recover damages, and not the franchise.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true of the liabilities of a franchisor and a franchisee?

Accepted Answer

A) The franchisor is not liable for any tort arising out of the franchise. 
B) Both franchisee and franchisor are jointly liable for torts committed by either. 
C) Franchisees are only liable on their own contracts. 
D) Franchisors are always liable for the torts of the franchisees. 
A) The franchisor is not liable for any tort arising out of the franchise. 
B) Both franchisee and franchisor are jointly liable for torts committed by either. 
C) Franchisees are only liable on their own contracts. 
D) Franchisors are always liable for the torts of the franchisees.

Question 8

Which of the following does the FTC franchise rule require from franchisors?

Accepted Answer

A) registration of the disclosure document with the FTC before it's used 
B) full presale disclosures to prospective franchisees nationwide 
C) statement to fully finance the infrastructure necessary to bring the franchisee to the franchisor's standard 
D) disclosure of license agreement made with franchisee that lets the franchisee use the franchisor's service mark 
A) registration of the disclosure document with the FTC before it's used 
B) full presale disclosures to prospective franchisees nationwide 
C) statement to fully finance the infrastructure necessary to bring the franchisee to the franchisor's standard 
D) disclosure of license agreement made with franchisee that lets the franchisee use the franchisor's service mark

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A royalty fee is an amount paid by the franchisor to the franchisee for the continuous use of its trademarks and maintenance of quality.

Accepted Answer

A) True 
 B)False

Question 11

If the product or service offered by a franchisor has not been tested, it should appear on the FTC franchise notice.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true of a franchise?

Accepted Answer

A) The franchisor and franchisee are established as separate legal entities. 
B) A franchisee does not need a license to use the franchisor's trademark. 
C) The franchisee does not have access to the franchisor's knowledge. 
D) A franchise is considered as a joint venture. 
A) The franchisor and franchisee are established as separate legal entities. 
B) A franchisee does not need a license to use the franchisor's trademark. 
C) The franchisee does not have access to the franchisor's knowledge. 
D) A franchise is considered as a joint venture.

Question 13

Where should the FTC franchise notice appear?

Accepted Answer

A) in the licensing agreement between the franchisor and franchise 
B) as a separate clause in the franchise agreement 
C) on the cover of a franchisor's required disclosure statement 
D) on the cover of a franchisee's required disclosure statement 
A) in the licensing agreement between the franchisor and franchise 
B) as a separate clause in the franchise agreement 
C) on the cover of a franchisor's required disclosure statement 
D) on the cover of a franchisee's required disclosure statement

Question 14

Apparent agency arises when a franchisee creates the appearance of being a franchisor's agent when in fact an actual agency does not exist.

Accepted Answer

A) True 
 B)False

Question 15

The UFOC satisfies only the FTC and a separate disclosure document should be prepared by the franchisor in accordance with state regulations.

Accepted Answer

A) True 
 B)False

Question 16

Joint venturers do not owe each other fiduciary duties of a loyalty and care as they are not bound by a contract.

Accepted Answer

A) True 
 B)False

Question 17

Termination-at-will clauses in franchise agreements are generally held to be void.

Accepted Answer

A) True 
 B)False

Question 18

A distributorship franchisee is called a subfranchisor.

Accepted Answer

A) True 
 B)False

Question 19

A ________ is an arrangement in which two or more business entities combine their resources to pursue a single project or transaction.

Accepted Answer

A) limited partnership 
B) license agreement 
C) joint venture 
D) franchise 
A) limited partnership 
B) license agreement 
C) joint venture 
D) franchise

Question 20

A strategic alliance is an arrangement between two or more companies whereby they agree to ally themselves and work together to accomplish a designated objective.

Accepted Answer

A) True 
 B)False

Exam 40: Franchises and Special Forms of Businesses

Which of the following documents sets forth the terms and conditions of a franchise?

Which of the following is true of a joint venture?

Which of the following federal agencies is empowered to enforce federal franchising rules?

A joint venture is an arrangement in which two or more business entities combine their resources to pursue an ongoing business operation.

Uniform Franchise Offering Circular refers to a uniform disclosure document that requires a franchisor to make specific presale disclosures to prospective franchisees.

A franchisee subject to wrongful termination can only recover damages, and not the franchise.

Which of the following is true of the liabilities of a franchisor and a franchisee?

Which of the following does the FTC franchise rule require from franchisors?

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

A royalty fee is an amount paid by the franchisor to the franchisee for the continuous use of its trademarks and maintenance of quality.

If the product or service offered by a franchisor has not been tested, it should appear on the FTC franchise notice.

Which of the following is true of a franchise?

Where should the FTC franchise notice appear?

Apparent agency arises when a franchisee creates the appearance of being a franchisor's agent when in fact an actual agency does not exist.

The UFOC satisfies only the FTC and a separate disclosure document should be prepared by the franchisor in accordance with state regulations.

Joint venturers do not owe each other fiduciary duties of a loyalty and care as they are not bound by a contract.

Termination-at-will clauses in franchise agreements are generally held to be void.

A distributorship franchisee is called a subfranchisor.

A ________ is an arrangement in which two or more business entities combine their resources to pursue a single project or transaction.

A strategic alliance is an arrangement between two or more companies whereby they agree to ally themselves and work together to accomplish a designated objective.

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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