Exam 34: Small Businesses and Franchapterises

A proprietor's opportunity to raise capital for a sole proprietorship is limited.

As a means of controlling quality, a franchise agreement can limit the franchisee's ability to sell the franchise to another party.

A franchisor does not have good cause to terminate a franchise for a franchisee's failure to meet specified sales quotas.

To prevent deception, all representations by a franchisor to a prospective franchisee must have a reasonable basis at the time they are made.

A franchisee can operate as an independent businessperson and choose any business form but still obtain the advantages of a regional or national organization.

Lara owns and operates Market Place, a venue for growers, crafters, and others to sell their goods, without creating a separate business organization. She receives all the profits from the vendors' fees and concession sales. This is most likely

The duration of a franchise is a matter set by state law, not to be otherwise determined between the parties.

Because a franchise can involve the license of a trademark, a trade name, or a copyright, the law governing intellectual property may apply in some situations.

Beeline Inc. offers entrepreneurs the opportunity to operate a franchise under the Beeline trade name as a dealer that sells and leases Beeline equipment. To potential franchisees, Beeline must provide

A court may decide that a franchisor has wrongfully terminated a franchise if the franchisor's decision to do so was made in the normal course of business.

A court may decide that a franchisor has wrongfully terminated a franchise if the franchisor's decision was arbitrary.

Donuts Whole Inc. offers an entrepreneur the opportunity to operate a franchise bakery under the Donuts Whole trade name. Before a franchise contract is signed, Donuts Whole must explain

Ruby is interested in buying a franchise from Snax Stores Inc. This transaction, like other franchise deals, is regulated to protect

In determining whether a franchisor acted in good faith when terminating a franchise agreement, a court will attempt to balance the rights of both parties.

Limited legal liability can be an advantage for a small business wishing to raise capital.

Ford is the sole proprietor of Go, a game subscription service. As a sole proprietor, on the business's profits, Ford pays

Because a franchisor's termination of a franchise can adversely affect a franchisee, much franchise litigation involves claims of wrongful termination.

eSports Inc. offers entrepreneurs the opportunity to operate a franchise under the eSports trade name as the owner of a game-playing venue. To possible franchisees, eSports makes earnings claims. For those claims, the franchisor

When the owner of a sole proprietorship dies, the business does not dissolve-it is automatically transferred to family members or other heirs.

To avoid conflicts with the First Amendment, no state requires a franchisor to submit ads aimed at prospective franchisees to the state for approval.