Exam 26: Sole Proprietorships and Private Franchises

Shop n' Pay Convenience Stores, Inc., is a franchisor. Tonya operates a Shop n' Pay franchise. Ulysses is one of Tonya's employees. As a franchisor, if Shop n' Pay controls the day-to-day operations of the business to a significant degree, it may be liable for tortious acts by​

Olav owns Precision Painting, a sole proprietorship. Olav's liability is​

A franchisee is generally legally independent of the franchisor.

Without creating a separate business organization, Reynold starts up, and assumes the financial risk of, Sole Savers, a new, pre-owned auto sales enterprise. Reynold is the financial risk of, Sole Savers, a new, pre-owned auto sales enterprise. Reynold is

Some states require the termination of a franchise when there is no "good cause" for it to continue.

Most franchise contracts provide that notice of termination must be given.

Traditionally, entrepreneurs have used one major business form-the sole proprietorship.

A sole proprietor does not own the entire business.

In a sole proprietorship, the proprietor shares the burden of any losses or liabilities incurred by the business enterprise with the government.

A sole proprietor pays personal and business income taxes on the business's profits.

The federal government regulates franchising through laws that apply to specific industries.

Foster enters into an agreement with Grab n' Eat Burgers, Inc., to operate a franchise in Home Town. Later, Grab n' Eat grants franchises to others within the same territory, causing Foster to suffer a significant loss in profits. In Foster's suit against Grab n' Eat, Foster's best argument is that the franchisor

Restful Inn Motel Corporation wants to terminate its franchise arrangement with Steve's Cabins. Their contract does not provide for notice of termination or set a time for winding up the business. This means that to wind up, Steve's​

No state requires franchisors to provide presale disclosures to prospective franchisees.

Wren owns and operates Yoga Center without creating a separate business organization. She receives all the profits from the fees for the classes and the sales of the center’s merchandise. Yoga Center is most likely

Nadia, the owner of Organic Farms, a sole proprietorship, wants to obtain additional business capital but to maintain control. This can best be accomplished by​

Good faith and fair dealing are not important in terminating a franchise relationship.

A franchisee is generally economically independent of the franchisor's integrated business system.

Fletcher buys a Greesy's Burgers, Inc., franchise. Greesy's requires that its franchisees buy its products exclusively for every phase of their operations. Because Fletcher wishes to buy less expensive products, he challenges the requirement. His best argument is probably that the requirement violates​

We-Haul Equipment Rentals, Inc., uses a Web site to provide downloadable information to prospective franchisees. This electronic information is the equivalent of an offer that must comply with​