Question 1

A joint venturer is not personally liable for the debts and obligations of the joint venture partnership.

Accepted Answer

A) True 
 B)False

Question 2

A joint venture is generally an implied contract that lasts until a party disassociated at will.

Accepted Answer

A) True 
 B)False

Question 3

The party who grants a license is known as the ________.

Accepted Answer

A) licensee 
B) licensor 
C) grantee 
D) grantor

Question 4

In a processing plant franchise, the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true for a franchisee that was terminated-at-will by a franchisor?

Accepted Answer

A) The franchisee can only recover damages. 
B) The franchisor cannot be held liable for a termination-at-will. 
C) The franchisee cannot apply for a franchisee again in the same field of business. 
D) The franchisee can sue to recover damages, and the franchise.

Question 6

An apparent agency is created when a franchisor and franchisee use the same trade name and trademarks but make no effort to inform the public of their separate legal status.

Accepted Answer

A) True 
 B)False

Question 7

In which of the following types of franchise does a franchisor provide a secret formula or process to the franchisee?

Accepted Answer

A) chain-style franchise 
B) area franchise 
C) distributorship franchise 
D) processing plant franchise

Question 8

In a(n)________ franchise, the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor.

Accepted Answer

A) chain-style 
B) area 
C) distributorship 
D) processing plant

Question 9

A(n)________ is an amount paid by the franchisee to the franchisor for the continued use of the franchisor's trade name, property, and assistance that is often computed as a percentage of the franchisee's gross sales.

Accepted Answer

A) royalty fee 
B) assessment fee 
C) lease fee 
D) contingency fee

Question 10

YouKnow Inc.is a corporation that creates educational resources.It grants Middlewest Public School the right to exclusively use its online encyclopedias for three years, in return for a fee.In this arrangement, YouKnow Inc.is the ________.

Accepted Answer

A) donor 
B) trustee 
C) grantor 
D) licensor

Question 11

Most franchise agreements permit a franchisor to terminate the franchise ________.

Accepted Answer

A) at will 
B) after five years of franchising 
C) for cause 
D) without just cause

Question 12

If a franchisor makes sales or earnings projections based on hypothetical examples, the franchisor must ________.

Accepted Answer

A) display a cautionary statement that warns against misuse of the franchisor's intellectual properties 
B) disclose the assumptions underlying the estimates 
C) register the disclosure document with the FTC prior to its use 
D) state that all data disclosed is only hypothetical and that actual data will be made available at the earliest

Question 13

Franchisors are not permitted to disclose trade secrets and product formulas to franchisees.

Accepted Answer

A) True 
 B)False

Question 14

A(n)________ refers to an agency that arises when a franchisor creates the image that a franchisee is its agent when in fact an actual agency does not exist.

Accepted Answer

A) apparent agency 
B) implicit agency 
C) agency by ratification 
D) implied agency

Question 15

In a franchise agreement, by default, the franchisor and franchisee are separate legal entities.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following data must a franchisor disclose if the franchisor makes sales or earnings projections for a potential franchise location that are based on the actual sales, income, or profit figures of an existing franchise?

Accepted Answer

A) contract details of the franchisor and the existing franchises 
B) management methods that have been adopted by the existing franchises 
C) the number and percentage of its actual franchises that have obtained such results 
D) any sales or marketing strategy employed by the franchisor in acquiring such results

Question 17

Which of the following types of clauses, in a franchise agreement, provides that any claim or controversy arising from the franchise agreement or an alleged breach thereof will be settled outside the courts?

Accepted Answer

A) reserve clause 
B) arbitration clause 
C) integration clause 
D) covenant not to compete

Question 18

A(n)________ refers to an arrangement between two or more companies whereby they agree to ally themselves and work together to accomplish a designated objective.

Accepted Answer

A) limited partnership 
B) strategic alliance 
C) joint venture 
D) franchise

Question 19

Which of the following mandatorily requires a license to be operational and legal?

Accepted Answer

A) a general partnership 
B) a conglomerate 
C) a joint venture 
D) a franchise

Question 20

Explain the extent of liability of a franchisor and a franchisee with an example.

Accepted Answer

The answer of Explain the extent of liability of a...

Exam 40: Franchises and Special Forms of Businesses

A joint venturer is not personally liable for the debts and obligations of the joint venture partnership.

A joint venture is generally an implied contract that lasts until a party disassociated at will.

The party who grants a license is known as the ________.

In a processing plant franchise, the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory.

Which of the following is true for a franchisee that was terminated-at-will by a franchisor?

An apparent agency is created when a franchisor and franchisee use the same trade name and trademarks but make no effort to inform the public of their separate legal status.

In which of the following types of franchise does a franchisor provide a secret formula or process to the franchisee?

In a(n) ________ franchise, the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor.

A(n) ________ is an amount paid by the franchisee to the franchisor for the continued use of the franchisor's trade name, property, and assistance that is often computed as a percentage of the franchisee's gross sales.

YouKnow Inc.is a corporation that creates educational resources.It grants Middlewest Public School the right to exclusively use its online encyclopedias for three years, in return for a fee.In this arrangement, YouKnow Inc.is the ________.

Most franchise agreements permit a franchisor to terminate the franchise ________.

If a franchisor makes sales or earnings projections based on hypothetical examples, the franchisor must ________.

Franchisors are not permitted to disclose trade secrets and product formulas to franchisees.

A(n) ________ refers to an agency that arises when a franchisor creates the image that a franchisee is its agent when in fact an actual agency does not exist.

In a franchise agreement, by default, the franchisor and franchisee are separate legal entities.

Which of the following data must a franchisor disclose if the franchisor makes sales or earnings projections for a potential franchise location that are based on the actual sales, income, or profit figures of an existing franchise?

Which of the following types of clauses, in a franchise agreement, provides that any claim or controversy arising from the franchise agreement or an alleged breach thereof will be settled outside the courts?

A(n) ________ refers to an arrangement between two or more companies whereby they agree to ally themselves and work together to accomplish a designated objective.

Which of the following mandatorily requires a license to be operational and legal?

Explain the extent of liability of a franchisor and a franchisee with an example.