Question 1

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) PepsiCo Inc. 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) PepsiCo Inc. 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.

Question 2

Which of the following types of clauses,in a franchise agreement,provides that any claim or controversy arising from the franchise agreement or an alleged breach thereof will be settled outside the courts?

Accepted Answer

A) reserve clause 
B) arbitration clause 
C) integration clause 
D) covenant not to compete 
A) reserve clause 
B) arbitration clause 
C) integration clause 
D) covenant not to compete

Question 3

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 4

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

Accepted Answer

A) limited partnership 
B) strategic alliance 
C) joint venture 
D) franchise 
A) limited partnership 
B) strategic alliance 
C) joint venture 
D) franchise

Question 5

franchise rule is a rule that requires franchisors to make full presale disclosures to prospective franchisees.16)The Federal Trade Commission (FT

Accepted Answer

A) True 
 B)False

Question 6

In a(n)________ 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) chain-style 
B) area 
C) distributorship 
D) processing plant 
A) chain-style 
B) area 
C) distributorship 
D) processing plant

Question 7

Where should the Federal Trade Commission (FTC)franchise notice appear?

Accepted Answer

A) in the licensing agreement between the franchisor and franchisee 
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 franchisee 
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 8

The Uniform Franchise Offering Circular (UFOC)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 9

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 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 a joint venture.

Question 10

A joint venturer is not personally liable for the debts and obligations of the joint venture partnership.

Accepted Answer

A) True 
 B)False

Question 11

Rio-Werner Corporation owns Rio's Sandwiches,a fast-food restaurant in New Jersey.It wants to operate in five cities on the west coast by means of franchisees which make and sell all menu items from Rio's Sandwiches.Which of the following would best suit Rio-Werner Corporation's franchise plan?

Accepted Answer

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

Question 12

In a franchise agreement,by default,the franchisor and franchisee are separate legal entities.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 Uniform Franchise Offering Circular (UFO
C) sets forth the terms and conditions of 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 Uniform Franchise Offering Circular (UFO
C) sets forth the terms and conditions of 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.

Question 15

Which of the following data must a franchisor disclose if the franchisor makes sales or earnings projections for a potential franchise location that are based on the actual sales,income,or profit figures of an existing franchise?

Accepted Answer

A) contract details of the franchisor and the existing franchises 
B) management methods that have been adopted by the existing franchises 
C) the number and percentage of its actual franchises that have obtained such results 
D) any sales or marketing strategy employed by the franchisor in acquiring such results 
A) contract details of the franchisor and the existing franchises 
B) management methods that have been adopted by the existing franchises 
C) the number and percentage of its actual franchises that have obtained such results 
D) any sales or marketing strategy employed by the franchisor in acquiring such results

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true of intellectual property of a franchisor?

Accepted Answer

A) Trademarks do not qualify for patents. 
B) A word or motto that identifies a franchisor does not qualify for trademark protection. 
C) A service mark is exclusive to the franchisor and cannot be licensed to franchisees. 
D) Trade secrets of a franchisor do not qualify for patent protection. 
A) Trademarks do not qualify for patents. 
B) A word or motto that identifies a franchisor does not qualify for trademark protection. 
C) A service mark is exclusive to the franchisor and cannot be licensed to franchisees. 
D) Trade secrets of a franchisor do not qualify for patent protection.

Question 18

Which of the following does the Federal Trade Commission (FTC)franchise rule require from franchisors?

Accepted Answer

A) registration of the disclosure document with the FTC before it is 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 is 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 19

Which of the following is true of a strategic alliance?

Accepted Answer

A) Strategic alliances cannot have more than two entities. 
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. 
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 20

The ________ is a uniform disclosure document that requires a franchisor to make specific presale disclosures to prospective franchisees.

Accepted Answer

A) UFOC 
B) UCC 
C) UCITA 
D) SEA 
A) UFOC 
B) UCC 
C) UCITA 
D) SEA

Exam 40: Franchises and Special Forms of Businesses

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

Which of the following types of clauses,in a franchise agreement,provides that any claim or controversy arising from the franchise agreement or an alleged breach thereof will be settled outside the courts?

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

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

franchise rule is a rule that requires franchisors to make full presale disclosures to prospective franchisees.16)The Federal Trade Commission (FT

In a(n)________ 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.

Where should the Federal Trade Commission (FTC)franchise notice appear?

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

Which of the following is true of a franchise?

A joint venturer is not personally liable for the debts and obligations of the joint venture partnership.

Rio-Werner Corporation owns Rio's Sandwiches,a fast-food restaurant in New Jersey.It wants to operate in five cities on the west coast by means of franchisees which make and sell all menu items from Rio's Sandwiches.Which of the following would best suit Rio-Werner Corporation's franchise plan?

In a franchise agreement,by default,the franchisor and franchisee are separate legal entities.

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

Which of the following is true of a franchise agreement?

Which of the following data must a franchisor disclose if the franchisor makes sales or earnings projections for a potential franchise location that are based on the actual sales,income,or profit figures of an existing franchise?

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

Which of the following is true of intellectual property of a franchisor?

Which of the following does the Federal Trade Commission (FTC)franchise rule require from franchisors?

Which of the following is true of a strategic alliance?

The ________ is a uniform disclosure document that requires a franchisor to make specific presale disclosures to prospective franchisees.

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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