Question 1

Frooty Drinx,Inc. ,and Erwin have a manufacturing franchise arrange?ment.This involves the transfer of

Accepted Answer

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

Question 2

Gustoso Gelato Company is a franchisor.Singh operates a Gustoso fran?chise.Reba is one of Singh's employees.As a franchisor,if Gustoso con?trols the day-to-day operations of the business to a significant degree,it may be liable for tortious acts by

Accepted Answer

A) no one. 
B) Gustoso only. 
C) Gustoso and Singh,but not Reba. 
D) Gustoso,Singh,or Reba. 
A) no one. 
B) Gustoso only. 
C) Gustoso and Singh,but not Reba. 
D) Gustoso,Singh,or Reba.

Question 3

Cluckee Chick'n Corporation provides its prospective franchisees with projected earnings figures based on actual data.Cluckee Chick'n must also disclose

Accepted Answer

A) the number and percentage of franchisees that achieved the figures. 
B) hypothetical examples of potential earnings. 
C) an answer to the entrepreneur's question,"How much will I make?" 
D) none of the choices. 
A) the number and percentage of franchisees that achieved the figures. 
B) hypothetical examples of potential earnings. 
C) an answer to the entrepreneur's question,"How much will I make?" 
D) none of the choices.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Franchisors are not required to disclose certain material facts to pro?spective franchisees.

Accepted Answer

A) True 
 B)False

Question 6

Some states require the termination of a franchise when there is no "good cause" for it to continue.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) general estimates of costs and sales,but not the basis for them. 
B) material facts such as the basis of projected earnings figures. 
C) no information. 
D) start-up requirements,but not renewal conditions. 
A) general estimates of costs and sales,but not the basis for them. 
B) material facts such as the basis of projected earnings figures. 
C) no information. 
D) start-up requirements,but not renewal conditions.

Question 8

Bernie wants to go into the business of construction contracting.Among the reasons that would probably convince Bernie to set up his business as a sole proprietorship would be

Accepted Answer

A) its greater flexibility. 
B) its limited liability. 
C) its perpetual existence. 
D) the ease of transferring the business to other family members. 
A) its greater flexibility. 
B) its limited liability. 
C) its perpetual existence. 
D) the ease of transferring the business to other family members.

Question 9

Ewa,the owner of Finest Enterprises,is a sole proprietor.What are the chief characteristics,advantages,and disadvantages of this form of busi?ness organization? Ewa wants to obtain additional capital to expand Finest,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?

Accepted Answer

A sole proprietorship is the simplest fo

Question 10

Hometown Realtors,Inc. ,sells a franchise to Group Sales Company.Group Sales is

Accepted Answer

A) a franchisee. 
B) a franchisor. 
C) an agent. 
D) a principal. 
A) a franchisee. 
B) a franchisor. 
C) an agent. 
D) a principal.

Question 11

Fern contracts to buy a franchise from Greene Grocery Inc.The contract is silent on the issue of territorial rights.Greene allows a competing franchise to be established near Fern's store,which suffers a significant loss in profits.This is most likely a violation of

Accepted Answer

A) no law. 
B) the ban on certain types of anticompetitive agreements. 
C) the Federal Trade Commission's Franchise Rule. 
D) the implied covenant of good faith and fair dealing. 
A) no law. 
B) the ban on certain types of anticompetitive agreements. 
C) the Federal Trade Commission's Franchise Rule. 
D) the implied covenant of good faith and fair dealing.

Question 12

Dingo Bangles Company wants to present information in "disclosure docu?ments" via the Internet to prospective franchisees.Among other legal re?quirements with which Dingo 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 Dingo to verify users' authenticity. 
D) register with the Federal Trade Commission via Dingo'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 Dingo to verify users' authenticity. 
D) register with the Federal Trade Commission via Dingo's Web site.

Question 13

A franchise agreement between Software2 Company and Games3,Inc. ,is silent on a time for termination of the franchise.Software2 may

Accepted Answer

A) never terminate. 
B) terminate at any time. 
C) terminate on reasonable notice. 
D) terminate on three days notice. 
A) never terminate. 
B) terminate at any time. 
C) terminate on reasonable notice. 
D) terminate on three days notice.

Question 14

Good faith and fair dealing are important in terminating a franchise relationship.

Accepted Answer

A) True 
 B)False

Question 15

Instead of setting up a business to market her own products,Teresa con?sid?ers entering into a distributorship franchise with Sparkly Beer Breweries Corporation.This involves the transfer of

Accepted Answer

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

Question 16

The laws governing franchising are primarily designed to protect fran?chisors from dishonest franchisees.

Accepted Answer

A) True 
 B)False

Question 17

A franchise exists when the owner of a copyright licenses its use to an?other party to sell goods or services.

Accepted Answer

A) True 
 B)False

Question 18

Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide rods and reels in a certain area.Their franchise agree?ment requires Gage to pay certain administrative expenses.Their agreement may also require Gage to pay a percentage of the franchisor's

Accepted Answer

A) advertising costs. 
B) personal expenses. 
C) retirement income. 
D) none of the choices. 
A) advertising costs. 
B) personal expenses. 
C) retirement income. 
D) none of the choices.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

Exam 36: A: Sole Proprietorships and Franchises

Frooty Drinx,Inc. ,and Erwin have a manufacturing franchise arrange?ment.This involves the transfer of

Gustoso Gelato Company is a franchisor.Singh operates a Gustoso fran?chise.Reba is one of Singh's employees.As a franchisor,if Gustoso con?trols the day-to-day operations of the business to a significant degree,it may be liable for tortious acts by

Cluckee Chick'n Corporation provides its prospective franchisees with projected earnings figures based on actual data.Cluckee Chick'n must also disclose

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

Franchisors are not required to disclose certain material facts to pro?spective franchisees.

Some states require the termination of a franchise when there is no "good cause" for it to continue.

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

Bernie wants to go into the business of construction contracting.Among the reasons that would probably convince Bernie to set up his business as a sole proprietorship would be

Hometown Realtors,Inc. ,sells a franchise to Group Sales Company.Group Sales is

Fern contracts to buy a franchise from Greene Grocery Inc.The contract is silent on the issue of territorial rights.Greene allows a competing franchise to be established near Fern's store,which suffers a significant loss in profits.This is most likely a violation of

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

A franchise agreement between Software2 Company and Games3,Inc. ,is silent on a time for termination of the franchise.Software2 may

Good faith and fair dealing are important in terminating a franchise relationship.

Instead of setting up a business to market her own products,Teresa con?sid?ers entering into a distributorship franchise with Sparkly Beer Breweries Corporation.This involves the transfer of

The laws governing franchising are primarily designed to protect fran?chisors from dishonest franchisees.

A franchise exists when the owner of a copyright licenses its use to an?other party to sell goods or services.

Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide rods and reels in a certain area.Their franchise agree?ment requires Gage to pay certain administrative expenses.Their agreement may also require Gage to pay a percentage of the franchisor's

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

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

A: Introduction to Law and Legal Reasoning

B: Introduction to Law and Legal Reasoning

C: Introduction to Law and Legal Reasoning

D: Introduction to Law and Legal Reasoning

A: Courts and Alternative Dispute Resolution

B: Courts and Alternative Dispute Resolution

A: Court Procedures

B: Court Procedures

A: Constitutional Authority to Regulate Business

B: Constitutional Authority to Regulate Business

A: Ethics and Business Decision Making

B: Ethics and Business Decision Making

A: Intentional Torts and Privacy

B: Intentional Torts and Privacy

A: Negligence and Strict Liability

B: Negligence and Strict Liability

C: Negligence and Strict Liability

D: Negligence and Strict Liability

A: Intellectual Property and Internet Law

B: Intellectual Property and Internet Law

A: Criminal Law and Cyber Crimes

B: Criminal Law and Cyber Crime

A: Nature and Terminology

B: Nature and Terminology

C: Nature and Terminology

D: Nature and Terminology

A: Agreement in Traditional and E-Contracts

B: Agreement in Traditional and E-Contracts

A: Consideration

B: Consideration

A: Capacity and Legality

B: Capacity and Legality

A: Mistakes,fraud,and Voluntary Consent

B: Mistakes,fraud,and Voluntary Consent

A: The Statute of Frauds

B: The Statute of Frauds

A: Third Party Rights

B: Third Party Rights

A: Performance and Discharge

B: Performance and Discharge

A: Breach of Contract and Remedies

B: Breach of Contract and Remedies

A: The Formation of Sales and Lease Contracts

B: The Formation of Sales and Lease Contracts

C: The Formation of Sales and Lease Contracts

D: The Formation of Sales and Lease Contracts

A: Title,risk,and Insurable Interest

B: Title,risk,and Insurable Interest

A: Performance Breach of Sales Lease Contracts

B: Performance Breach of Sales Lease Contracts

A: Warranties and Product Liability

B: Warranties and Product Liability

A: International Law in a Global Economy

B: International Law in a Global Economy

A: The Function Creation of Negotiable Instruments

B: The Function Creation of Negotiable Instruments

C: The Function Creation of Negotiable Instruments

D: The Function Creation of Negotiable Instruments

A: Transferability and Holder in Due Course

B: Transferability and Holder in Due Course

A franchise agreement between Software² Company and Games³,Inc. ,is silent on a time for termination of the franchise.Software² may