Exam 2: Small Businesses and Franchises

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

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

A number of states require franchisors to provide presale disclosures to prospective franchisees.

Gary buys from Hook, Line & Sinker Corporation the exclusive right to sell its trademarked fishing gear in a certain area. Their franchise agreement requires Gary to pay certain administrative expenses. Their agreement may also require the franchisee to pay a percentage of the franchisor's

Bill sells Corner Deli, a sole proprietorship, to Debra. This is

Without creating a separate business organization, Roy starts up Sole Savers, a new, pre-owned auto sales enterprise. Roy is

To protect franchisees against arbitrary or bad faith termination, a state law may require certain procedures be followed in terminating a franchise.

Carl starts up, and assumes the financial risk of, DataWorks, a new Web marketing enterprise. Carl and DataWorks must meet legal requirements relating to​

In choosing a form of business organization for a new enterprise, important factors include tax considerations.

Fact Pattern 2-1 Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales. -Refer to Fact Pattern 2-1.To potential investors, Jumbo Juice must provide

Del owns Everlast Painting, a sole proprietorship. Del's liability is

A franchisee ordinarily does not pay a fee for a franchise license (the privilege of being granted a franchise).

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

Soup Factory, 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

The validity of a provision permitting the franchisor to establish and enforce certain quality standards is questionable.

Emma is interested in buying a franchise from Fine Jewelry, Inc. The franchisor must disclose material facts that Emma needs to make an informed decision concerning this purchase, according to

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

Fact Pattern 2-1 Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales. -Refer to Fact Pattern 2-1.Before a franchise contract is signed, Jumbo Juice must explain

Fact Pattern 2-1 Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales. -Refer to Fact Pattern 2-1.Jumbo Juice makes earnings claims to potential investors. For those claims, the franchisor

A sole proprietor owns the entire business.