Exam 36: Sole Proprietorships and Franchises

Fact Pattern 36-1 (Questions B10-B11 apply) 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 36-1. To potential investors, Jumbo Juice must provide

When a franchise agreement contains a notice-and-cure provision, a franchisee's breach of the duty of honesty and fidelity is not enough to allow the franchisor to terminate the franchise.

If a franchisor's decision to terminate a franchise is made in the normal course of business and reasonable notice is given, it is less likely that the termination will be considered wrongful.

Rini, the owner of Simply Sushi, is a sole proprietor. What are the chief characteristics, advantages, and disadvantages of this form of busi?ness organization? Rini wants to obtain additional capital to expand Simply Sushi, but she does not want to lose control of the firm. As a sole proprie?tor, what is her best option to attain these goals?

Cookie Shops, Inc., sells a franchise to Donuts & Desserts, a mall food-court vendor. Cookie Shops is

In choosing a form of business organization for a new enterprise, impor?tant factors include the ability to raise capital.

The franchisor may require that the business use a particular organizational form and capital structure.

A sole proprietor is free to make any decision he or she wishes concerning the business.

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

Some states require that a franchisor submit advertising aimed at pro?spective franchisees to the state for approval.

Instead of setting up a business to market her own products, Rita con?sid?ers entering into a distributorship franchise with Sports Equipment Corporation. This involves the transfer of

Level Fencing Company wants to present information in "disclosure docu?ments" via the Internet to prospective franchisees. Among other legal re?quirements with which Level Fencing must comply, prospective franchisees must

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

Sauces n' Syrups, Inc., and Thad's Sweet & Spicy Bottling Plant have a manufacturing franchise arrange?ment. This involves the transfer of

George buys from Haul-U Corporation the exclusive right to use the Haul-U trademark and sell and lease Haul-U-brand products in a certain area. Their franchise agree?ment requires George to pay certain administrative expenses. Their agreement may also require George to pay a percentage of the franchisor's

Ralph is interested in buying a franchise from Sparkle Beverages Inc. For Ralph to make an informed decision concerning this purchase, Sparkle Beverages must disclose in writ?ing or online

Fact Pattern 36-1 (Questions B10-B11 apply) 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 36-1. Jumbo Juice makes earnings claims to potential investors. For those claims, the franchisor

The franchise agreement is not likely to set out standards such as sales quotas and record-keeping requirements.

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

Kari is the sole proprietor of Living Earth Garden Shop. As a sole proprietor, on the business's profits, Kari pays