Question 1

A franchisee is also a licensee.

Accepted Answer

A) True 
 B)False

Question 2

Franchise agreements frequently include training requirements for franchisees and their employees.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not one of the common general forms of franchises?

Accepted Answer

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

Question 4

Franchises account for approximately what percent of total retail sales in the United States?

Accepted Answer

A)  15 
B)  25 
C)  40 
D)  50 
E)  65 
A)  15 
B)  25 
C)  40 
D)  50 
E)  65

Question 5

Which of the following remedies is generally available for breach of a franchise agreement?

Accepted Answer

A)  rescission 
B)  restitution 
C)  damages 
D)  A or B only 
E)  A,B,or C 
A)  rescission 
B)  restitution 
C)  damages 
D)  A or B only 
E)  A,B,or C

Question 6

The FTC mandates that franchisors make full presale disclosure nationwide to prospective franchisees.

Accepted Answer

A) True 
 B)False

Question 7

The Squirrel Tail Ale Microbrewery has granted a franchise to Jimmy to run a Squirrel Tail Ale Brewpub in Chicago.Jimmy opens the brewpub,but has started purchasing a less expensive beer and selling it in this brewpub as Squirrel Tail Ale.Jimmy has most likely:

Accepted Answer

A)  breached the franchise agreement,but nothing more 
B)  infringed the trademark of Squirrel Tail Ale 
C)  not done anything wrong because requiring the sale of Squirrel Tail Ale would be an illegal tying arrangement 
D)  perhaps done something wrong,but he could not lose his franchise because it is against public policy to unilaterally terminate a franchise 
A)  breached the franchise agreement,but nothing more 
B)  infringed the trademark of Squirrel Tail Ale 
C)  not done anything wrong because requiring the sale of Squirrel Tail Ale would be an illegal tying arrangement 
D)  perhaps done something wrong,but he could not lose his franchise because it is against public policy to unilaterally terminate a franchise

Question 8

A Ford Motor Company dealership is an example of what type of franchise?

Accepted Answer

A)  distributorship 
B)  processing plant 
C)  service 
D)  chain-style 
A)  distributorship 
B)  processing plant 
C)  service 
D)  chain-style

Question 9

A franchise agreement will normally contain capital requirements for the franchisee.

Accepted Answer

A) True 
 B)False

Question 10

The cost of supplies purchased from the franchisor is usually not a franchise fee payable to the franchisor.

Accepted Answer

A) True 
 B)False

Exam 40: Franchises and Special Forms of Business

A franchisee is also a licensee.

Franchise agreements frequently include training requirements for franchisees and their employees.

Which of the following is not one of the common general forms of franchises?

Franchises account for approximately what percent of total retail sales in the United States?

Which of the following remedies is generally available for breach of a franchise agreement?

The FTC mandates that franchisors make full presale disclosure nationwide to prospective franchisees.

The Squirrel Tail Ale Microbrewery has granted a franchise to Jimmy to run a Squirrel Tail Ale Brewpub in Chicago.Jimmy opens the brewpub,but has started purchasing a less expensive beer and selling it in this brewpub as Squirrel Tail Ale.Jimmy has most likely:

A Ford Motor Company dealership is an example of what type of franchise?

A franchise agreement will normally contain capital requirements for the franchisee.

The cost of supplies purchased from the franchisor is usually not a franchise fee payable to the franchisor.

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