Question 1

Franchisors are not permitted to disclose trade secrets and product formulas to franchisees.

Accepted Answer

A) True 
 B)False  False

Question 2

YouKnow Inc.is a corporation that creates educational resources.It grants Middlewest Public School the right to exclusively use its online encyclopedias for three years,for a fee.In this arrangement,YouKnow Inc.is the ________.

Accepted Answer

A) donor 
B) trustee 
C) grantor 
D) licensor 
A) donor 
B) trustee 
C) grantor 
D) licensor D

Question 3

A franchisor discloses a cautionary statement that reads,"Caution: These figures are only estimates of what we think you may earn.There is no assurance you'll do as well.If you rely upon our figures,you must accept the risk of not doing so well." This is an instance of ________.

Accepted Answer

A) disclosure of earning projections based on actual data 
B) disclosure of earning projections based on hypothetical data 
C) nondisclosure of sales or earnings projections 
D) fraudulent disclosure by the franchisor 
A) disclosure of earning projections based on actual data 
B) disclosure of earning projections based on hypothetical data 
C) nondisclosure of sales or earnings projections 
D) fraudulent disclosure by the franchisor B

Question 4

A franchisor discloses a cautionary statement that reads,"Caution: Some outlets have sold this amount.There is no assurance you'll do as well.If you rely upon our figures,you must accept the risk of not doing so well." This is an instance of ________.

Accepted Answer

A) disclosure of earning projections based on actual data 
B) disclosure of sales projections based on hypothetical data 
C) nondisclosure of sales or earnings projections 
D) fraudulent disclosure by the franchisor 
A) disclosure of earning projections based on actual data 
B) disclosure of sales projections based on hypothetical data 
C) nondisclosure of sales or earnings projections 
D) fraudulent disclosure by the franchisor

Question 5

In a processing plant 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 6

Which of the following is true of a joint venture corporation?

Accepted Answer

A) The joint venturers are personally liable for debts of the joint venture corporation. 
B) Joint venturers do not owe each other fiduciary duties as a venture is a single business transaction. 
C) The management rights of joint venturers in a joint venture are divided in ratio of their capital investment. 
D) Each joint venture is liable for the debts and obligations of the joint venture. 
A) The joint venturers are personally liable for debts of the joint venture corporation. 
B) Joint venturers do not owe each other fiduciary duties as a venture is a single business transaction. 
C) The management rights of joint venturers in a joint venture are divided in ratio of their capital investment. 
D) Each joint venture is liable for the debts and obligations of the joint venture.

Question 7

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 8

Which of the following mandatorily requires a license to be operational and legal?

Accepted Answer

A) a general partnership 
B) a conglomerate 
C) a joint venture 
D) a franchise 
A) a general partnership 
B) a conglomerate 
C) a joint venture 
D) a franchise

Question 9

A franchisor that makes sales or earnings projections based on hypothetical examples need not disclose the assumptions underlying the estimates.

Accepted Answer

A) True 
 B)False

Question 10

A franchisor is not permitted to terminate a franchise for any reason.

Accepted Answer

A) True 
 B)False

Question 11

Trade secrets do not qualify for copyright protection.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Explain the concept of joint venture as a business arrangement in brief.

Accepted Answer

A joint venture is an arrangement in whi

Question 14

If a franchisor makes sales or earnings projections based on hypothetical examples,the franchisor must ________.

Accepted Answer

A) display a cautionary statement that warns against misuse of the franchisor's intellectual properties 
B) disclose the assumptions underlying the estimates 
C) register the disclosure document with the FTC prior to its use 
D) state that all data disclosed is only hypothetical and that actual data will be made available at the earliest 
A) display a cautionary statement that warns against misuse of the franchisor's intellectual properties 
B) disclose the assumptions underlying the estimates 
C) register the disclosure document with the FTC prior to its use 
D) state that all data disclosed is only hypothetical and that actual data will be made available at the earliest

Question 15

A(n)________ is established when one party licenses another party to use the first party's trade name,trademarks,commercial symbols,patents,copyrights,and other property in the distribution and selling of goods and services.

Accepted Answer

A) proprietorship 
B) franchise 
C) implicit contract 
D) general partnership 
A) proprietorship 
B) franchise 
C) implicit contract 
D) general partnership

Question 16

Intrepid Creations is a product design institute which provides educational courses in package design.It manages to acquire the right to use simulation software from Marco Software for a payment of $2,000 a year.There is no clause of expiration on this arrangement and the right to access the software is renewed annually.Which of the following kinds of business arrangements does the aforementioned scenario indicate?

Accepted Answer

A) a licensing arrangement 
B) a general partnership 
C) a limited partnership 
D) a franchise 
A) a licensing arrangement 
B) a general partnership 
C) a limited partnership 
D) a franchise

Question 17

In which of the following types of franchise does a franchisor provide a secret formula or process to the franchisee?

Accepted Answer

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

Question 18

A franchise is an example of a license.

Accepted Answer

A) True 
 B)False

Question 19

Partners to a strategic alliance can be potential competitors to each other.

Accepted Answer

A) True 
 B)False

Question 20

A distributorship franchisee is called a subfranchisor.

Accepted Answer

A) True 
 B)False

Exam 40: Franchises and Special Forms of Businesses

Franchisors are not permitted to disclose trade secrets and product formulas to franchisees.

YouKnow Inc.is a corporation that creates educational resources.It grants Middlewest Public School the right to exclusively use its online encyclopedias for three years,for a fee.In this arrangement,YouKnow Inc.is the ________.

A franchisor discloses a cautionary statement that reads,"Caution: These figures are only estimates of what we think you may earn.There is no assurance you'll do as well.If you rely upon our figures,you must accept the risk of not doing so well." This is an instance of ________.

A franchisor discloses a cautionary statement that reads,"Caution: Some outlets have sold this amount.There is no assurance you'll do as well.If you rely upon our figures,you must accept the risk of not doing so well." This is an instance of ________.

In a processing plant 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.

Which of the following is true of a joint venture corporation?

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.

Which of the following mandatorily requires a license to be operational and legal?

A franchisor that makes sales or earnings projections based on hypothetical examples need not disclose the assumptions underlying the estimates.

A franchisor is not permitted to terminate a franchise for any reason.

Trade secrets do not qualify for copyright protection.

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

Explain the concept of joint venture as a business arrangement in brief.

If a franchisor makes sales or earnings projections based on hypothetical examples,the franchisor must ________.

A(n)________ is established when one party licenses another party to use the first party's trade name,trademarks,commercial symbols,patents,copyrights,and other property in the distribution and selling of goods and services.

In which of the following types of franchise does a franchisor provide a secret formula or process to the franchisee?

A franchise is an example of a license.

Partners to a strategic alliance can be potential competitors to each other.

A distributorship franchisee is called a subfranchisor.

Legal Environment of Business and Online Commerce

Courts and Jurisdiction

Judicial, alternative, and Online 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 Crime

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

Digital Law and E-Commerce

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

Banking System and Electronic Financial Transactions

Credit, mortgages, and Debtors Rights

Secured Transactions

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, agents, and Independent Contractors

Employment, worker Protection, and Immigration Law

Labor Law

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, real Property, and Insurance

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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