Exam 36: Sole Proprietorships and Franchises

Effervescent Soda Bottling Company is

Inger is a franchisee of Honey Bear Restaurants,LLC Their contract gives Honey Bear the right to control virtually all aspects of Inger's op?eration,including the hiring of employees.One of the employees,Joris commits a tort against Kiley,one of Inger's customers.Kiley files a suit against Honey Bear.Honey Bear is most likely

A sole proprietorship lacks continuity on the death of the proprietor.

A franchise contract may use only one type of business organization-the sole proprietorship.

Doc's Sports Club and Elite Fitness Corporation enter into a franchise agreement that provides for its termination at any time for "cause." Doc's fails to meet Elite's membership sales quota.Is this "cause" for termination? Explain.

Jim organized,and owns and operates,Jim's Landscaping Service in the simplest form of business organization.This is

A franchisor's decision to terminate a franchise may be made in the normal course of business operations.

Stacy contracts to buy a franchise from Tender Steak House Company.In this contract,as in most franchise contracts,the determination of the territory to be served is made by

Dominique buys a franchise from Cheyenne Artisans,Inc.This provides Cheyenne with an outlet for the firm's goods,some of which Dominique is required to buy at an established price.In their agree?ment,Cheyenne may also specify

Leo buys an exclusive territory in which he is authorized to set up a plant to make Midwest Dairy,Inc.,products.After receiving the formula,Leo begins making Nice Ice-brand ice cream and other Midwest prod?ucts.This is

A franchise relationship may be governed by the law covering sales con?tracts as expressed in Article 2 of the Uniform Commercial Code.

Hermione starts up,and assumes the financial risk of,Graphic Ads,a new enterprise.Hermione is

Burger Heaven,Inc.,conducts a chain-style franchise.This involves the transfer to Chester,one of its franchisees,of

Echo enters into an agreement with Deep Pan Pies,Inc.,to operate a franchise in Centre City.Later,Deep grants franchises to others within the city.Echo files a suit to close them.If the court rules in Echo's favor it will most likely be on the ground that

Flip Gymnastics & Karate,Inc.,grants a franchise to Gibby to operate a Flip gym.Flip may require Gibby to pay the franchisor a percentage of his

Typically,the franchisee determines the territory to be served by the franchise.

The simplest form of business is a sole proprietorship.

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

A franchisee ordinarily pays an initial fee or lump sum price for a fran?chise license.

Mika buys a Nuance Cabinets,Inc.,franchise,which the franchisor later termi?nates.In determining whether the termination was proper,a court will generally