Question 1

Laws governing franchising are designed in part to prevent franchisors from terminating franchises without good cause.

Accepted Answer

A) True 
 B)False

Question 2

Star Resorts Corporation wants to terminate its franchise arrangement with Tony.Their contract does not provide for notice of termination or set a time for winding up the business.This means that to wind up,Tony

Accepted Answer

A) has a reasonable time,with notice. 
B) has whatever time A determines,with or without notice. 
C) is entitled to notice,but nothing more. 
D) must close immediately. 
A) has a reasonable time,with notice. 
B) has whatever time A determines,with or without notice. 
C) is entitled to notice,but nothing more. 
D) must close immediately.

Question 3

Bret buys a franchise from Comida Mexicano Ltd.If their agreement is like most franchise agree?ments,it will specify that Comida can ter?mi?nate the franchise

Accepted Answer

A) at will. 
B) for any reason. 
C) for cause only. 
D) for no reason. 
A) at will. 
B) for any reason. 
C) for cause only. 
D) for no reason.

Question 4

Normally,a franchisee receives a windfall on the termination of a franchise.

Accepted Answer

A) True 
 B)False

Question 5

Pilar is interested in buying a franchise from Quixotic Bike Corporation.Quixotic must disclose material facts that Pilar needs to make an in?formed decision concerning this purchase,according to

Accepted Answer

A) no law. 
B) the Petroleum Marketing Practices Act of 1979. 
C) the Federal Trade Commission's Franchise Rule. 
D) the Uniform Commercial Code. 
A) no law. 
B) the Petroleum Marketing Practices Act of 1979. 
C) the Federal Trade Commission's Franchise Rule. 
D) the Uniform Commercial Code.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

If a party to a franchise contract fails to perform its contractual duties,the other party may be subject to a lawsuit for breach of contract.

Accepted Answer

A) True 
 B)False

Question 8

In-Home Maid Service Company uses a Web site to provide downloadable in?formation to prospective franchises.This online information is the equivalent of an offer that must comply with

Accepted Answer

A) the Automobile Dealers' Franchise Act of 1965. 
B) the Petroleum Marketing Practices Act of 1979. 
C) the Federal Trade Commission's Franchise Rule. 
D) the state Franchise Disclosure Document,or FDD. 
A) the Automobile Dealers' Franchise Act of 1965. 
B) the Petroleum Marketing Practices Act of 1979. 
C) the Federal Trade Commission's Franchise Rule. 
D) the state Franchise Disclosure Document,or FDD.

Question 9

A franchisor is the purchaser of a franchise.

Accepted Answer

A) True 
 B)False

Question 10

The duration of a franchise is a matter to be determined between the parties.

Accepted Answer

A) True 
 B)False

Question 11

A franchisor can require a franchisee to purchase certain supplies from the franchisor at an established price.

Accepted Answer

A) True 
 B)False

Question 12

Carl sells Direct Marketing Enterprises,a sole proprietorship,to Eve.This is a transfer of

Accepted Answer

A) a license. 
B) a trade name. 
C) the formula to make a product. 
D) the ownership of the business. 
A) a license. 
B) a trade name. 
C) the formula to make a product. 
D) the ownership of the business.

Question 13

Otis is interested in buying a franchise from Plentiful Markets Inc.This transaction,like other franchise deals,is regulated to protect

Accepted Answer

A) certain types of anticompetitive agreements. 
B) franchisors from dishonest prospective franchisees. 
C) prospective franchisees from dishonest franchisors. 
D) the government's power to restrict freedom of contract. 
A) certain types of anticompetitive agreements. 
B) franchisors from dishonest prospective franchisees. 
C) prospective franchisees from dishonest franchisors. 
D) the government's power to restrict freedom of contract.

Question 14

A franchise is a contractual arrangement.

Accepted Answer

A) True 
 B)False

Question 15

Sweet Styles,Inc.,a franchisor of clothing stores,wishes to standardize the pricing practices of its franchisees that have engaged in price-cutting to increase their respective shares of the market.The most pru?dent action might be for Sweet to

Accepted Answer

A) mandate the prices at which its franchisees sell their products. 
B) suggest the prices at which its franchisees sell their products. 
C) require its franchisees to buy inventory exclusively from Sweet. 
D) threaten its franchisees with a material breach of contract. 
A) mandate the prices at which its franchisees sell their products. 
B) suggest the prices at which its franchisees sell their products. 
C) require its franchisees to buy inventory exclusively from Sweet. 
D) threaten its franchisees with a material breach of contract.

Question 16

A manufacturer's license to a dealer to sell a product is a chain-style business operation.

Accepted Answer

A) True 
 B)False

Question 17

A franchisee can operate as an independent businessperson but cannot then obtain the advantages of a national organization.

Accepted Answer

A) True 
 B)False

Question 18

Owen plans to open Owen's Pets Store,a pet supplies outlet,and to hire Quinn and Ruth.Owen will invest only his own money.He does not ex?pect to make any profit for at least two years and to make almost no profit for the first three years,but he hopes to expand eventually.Which form of business organization would be most appropriate?

Accepted Answer

When a business is relatively small and

Question 19

Some states require franchisors to provide presale disclosures to pro?spective franchisees.

Accepted Answer

A) True 
 B)False

Question 20

The day-t-day operation of franchise business normally is left up to the franchisee.

Accepted Answer

A) True 
 B)False

Exam 36: Sole Proprietorships and Franchises

Laws governing franchising are designed in part to prevent franchisors from terminating franchises without good cause.

Star Resorts Corporation wants to terminate its franchise arrangement with Tony.Their contract does not provide for notice of termination or set a time for winding up the business.This means that to wind up,Tony

Bret buys a franchise from Comida Mexicano Ltd.If their agreement is like most franchise agree?ments,it will specify that Comida can ter?mi?nate the franchise

Normally,a franchisee receives a windfall on the termination of a franchise.

Pilar is interested in buying a franchise from Quixotic Bike Corporation.Quixotic must disclose material facts that Pilar needs to make an in?formed decision concerning this purchase,according to

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

If a party to a franchise contract fails to perform its contractual duties,the other party may be subject to a lawsuit for breach of contract.

In-Home Maid Service Company uses a Web site to provide downloadable in?formation to prospective franchises.This online information is the equivalent of an offer that must comply with

A franchisor is the purchaser of a franchise.

The duration of a franchise is a matter to be determined between the parties.

A franchisor can require a franchisee to purchase certain supplies from the franchisor at an established price.

Carl sells Direct Marketing Enterprises,a sole proprietorship,to Eve.This is a transfer of

Otis is interested in buying a franchise from Plentiful Markets Inc.This transaction,like other franchise deals,is regulated to protect

A franchise is a contractual arrangement.

Sweet Styles,Inc.,a franchisor of clothing stores,wishes to standardize the pricing practices of its franchisees that have engaged in price-cutting to increase their respective shares of the market.The most pru?dent action might be for Sweet to

A manufacturer's license to a dealer to sell a product is a chain-style business operation.

A franchisee can operate as an independent businessperson but cannot then obtain the advantages of a national organization.

Some states require franchisors to provide presale disclosures to pro?spective franchisees.

The day-t-day operation of franchise business normally is left up to the franchisee.

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability,defenses,and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Formation and Duties

Agency Liability and Termination

Employment,immigration,and Labor Law

Employment Discrimination

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors,officers, Shareholders

Corporate Merger, consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

Legal and Ethical Considerations in Sustainability, Discovery, and Corporate Behavior

Legal and Ethical Issues in Contemporary Society

Contracts and Agreements

Legal Issues in Iowa's Video Game Labeling Statute, National Export Initiative, and Contract Law

Banking and Loan Liability

Bankruptcy and Agricultural Credit: Debts, Reporting, and Risk

Legal and Ethical Issues in Employment and Agency Relationships

Legal Issues in Business Franchising, LLC Management, Tax Collection, Director Liability, and Securities Regulations

Compliance and Ethics Issues in Business Operations