Question 1

The franchise agreement is not likely to set out standards for the franchise to meet.

Accepted Answer

A) True 
 B)False

Question 2

Haute Dogs, Inc., sells a franchise to Irene's Cuisine, a lunch truck. Irene's Cuisine is​

Accepted Answer

A)  ​a franchisee. 
B)  ​a franchisor. 
C)  ​a partner. 
D)  ​a principal. 
A)  ​a franchisee. 
B)  ​a franchisor. 
C)  ​a partner. 
D)  ​a principal.

Question 3

Paradise Footwear buys a franchise from Quadrangle Athletic Shoes Inc. This relationship, like all other franchise relationships, is governed by​

Accepted Answer

A)  ​contract law. 
B)  ​no law. 
C)  ​the Franchise Disclosure Document, or FDD. 
D)  ​Article 2 of the Uniform Commercial Code. 
A)  ​contract law. 
B)  ​no law. 
C)  ​the Franchise Disclosure Document, or FDD. 
D)  ​Article 2 of the Uniform Commercial Code.

Question 4

The duration of a franchise is a matter determined by federal or state statutes.

Accepted Answer

A) True 
 B)False

Question 5

In a manufacturing arrangement, a franchisor transmits to a franchisee the essential ingredients or formula to make a particular product. ​

Accepted Answer

A) True 
 B)False

Question 6

Kari owns and operates Living Earth Garden Shop, an outdoor tool and landscaping supplies retail store, as a sole proprietorship. When Kari dies, Living Earth will automatically​

Accepted Answer

A)  ​cease to continue. 
B)  ​pass to the state. 
C)  ​be offered for sale to its creditors and competitors. 
A)  ​cease to continue. 
B)  ​pass to the state. 
C)  ​be offered for sale to its creditors and competitors.

Question 7

Bill sells Corner Deli & Groceries, a sole proprietorship, to Diane. This is​

Accepted Answer

A)  ​a franchise. 
B)  ​not a transfer of ownership without the approval of the other owners of the business. 
C)  ​not a transfer of ownership because a sole proprietorship cannot be transferred. 
D)  ​a transfer of the ownership of the business. 
A)  ​a franchise. 
B)  ​not a transfer of ownership without the approval of the other owners of the business. 
C)  ​not a transfer of ownership because a sole proprietorship cannot be transferred. 
D)  ​a transfer of the ownership of the business.

Question 8

Level Fencing Company wants to present information in "disclosure documents" via the Internet to prospective franchisees. Among other legal requirements with which Level Fencing must comply, prospective franchisees must​

Accepted Answer

A)  ​agree to settle any lawsuits that may arise over the documents. 
B)  ​be able to download or save all electronic documents. 
C)  ​provide e-mail addresses for Level Fencing to verify users' authenticity. 
D)  ​register with the Federal Trade Commission via Level Fencing's Web site. 
A)  ​agree to settle any lawsuits that may arise over the documents. 
B)  ​be able to download or save all electronic documents. 
C)  ​provide e-mail addresses for Level Fencing to verify users' authenticity. 
D)  ​register with the Federal Trade Commission via Level Fencing's Web site.

Question 9

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​

Accepted Answer

A)  ​a franchisee. 
B)  ​a franchisor. 
C)  ​a partner. 
D)  ​a sole proprietor. 
A)  ​a franchisee. 
B)  ​a franchisor. 
C)  ​a partner. 
D)  ​a sole proprietor.

Question 10

Digital Wizards, Inc., a franchisor of computer technicians, wishes to standardize the pricing practices of its franchisees because they have engaged in price-cutting to increase their respective shares of the market. The most prudent action might be for Digital Wizardsto

Accepted Answer

A)  ​mandate the prices at which its franchisees sell their services. 
B)  ​suggest the prices at which its franchisees sell their services. 
C)  ​require its franchisees to pay a premium based on any increase in their market share. 
D)  ​threaten its franchisees with a suit for material breach of contract. 
A)  ​mandate the prices at which its franchisees sell their services. 
B)  ​suggest the prices at which its franchisees sell their services. 
C)  ​require its franchisees to pay a premium based on any increase in their market share. 
D)  ​threaten its franchisees with a suit for material breach of contract.

Question 11

State deceptive trade practices acts do not apply to actions by franchisors.

Accepted Answer

A) True 
 B)False

Question 12

Mai-Lin's Martial Arts, Inc., grants a franchise to Naomi to operate a Mai-Lin's school. Mai-Lin's may require Naomi to pay the franchisor a percentage of her​

Accepted Answer

A)  ​annual sales or volume of business. 
B)  ​weekly payroll expense. 
C)  ​monthly overhead savings. 
D)  ​income from unrelated business activities. 
A)  ​annual sales or volume of business. 
B)  ​weekly payroll expense. 
C)  ​monthly overhead savings. 
D)  ​income from unrelated business activities.

Exam 26: Sole Proprietorships and Private Franchises

The franchise agreement is not likely to set out standards for the franchise to meet.

Haute Dogs, Inc., sells a franchise to Irene's Cuisine, a lunch truck. Irene's Cuisine is​

Paradise Footwear buys a franchise from Quadrangle Athletic Shoes Inc. This relationship, like all other franchise relationships, is governed by​

The duration of a franchise is a matter determined by federal or state statutes.

In a manufacturing arrangement, a franchisor transmits to a franchisee the essential ingredients or formula to make a particular product. ​

Kari owns and operates Living Earth Garden Shop, an outdoor tool and landscaping supplies retail store, as a sole proprietorship. When Kari dies, Living Earth will automatically​

Bill sells Corner Deli & Groceries, a sole proprietorship, to Diane. This is​

Level Fencing Company wants to present information in "disclosure documents" via the Internet to prospective franchisees. Among other legal requirements with which Level Fencing must comply, prospective franchisees must​

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​

Digital Wizards, Inc., a franchisor of computer technicians, wishes to standardize the pricing practices of its franchisees because they have engaged in price-cutting to increase their respective shares of the market. The most prudent action might be for Digital Wizardsto

State deceptive trade practices acts do not apply to actions by franchisors.

Mai-Lin's Martial Arts, Inc., grants a franchise to Naomi to operate a Mai-Lin's school. Mai-Lin's may require Naomi to pay the franchisor a percentage of her​

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Haute Dogs, Inc., sells a franchise to Irene's Cuisine, a lunch truck. Irene's Cuisine is

Paradise Footwear buys a franchise from Quadrangle Athletic Shoes Inc. This relationship, like all other franchise relationships, is governed by

In a manufacturing arrangement, a franchisor transmits to a franchisee the essential ingredients or formula to make a particular product.

Kari owns and operates Living Earth Garden Shop, an outdoor tool and landscaping supplies retail store, as a sole proprietorship. When Kari dies, Living Earth will automatically

Bill sells Corner Deli & Groceries, a sole proprietorship, to Diane. This is

Level Fencing Company wants to present information in "disclosure documents" via the Internet to prospective franchisees. Among other legal requirements with which Level Fencing must comply, prospective franchisees must

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

Mai-Lin's Martial Arts, Inc., grants a franchise to Naomi to operate a Mai-Lin's school. Mai-Lin's may require Naomi to pay the franchisor a percentage of her