Question 1

Challenge Games Corporation licenses the trademarks to its products to Direct Marketing,Inc.,to reproduce on caps,sweatshirts,and similar goods for sale. This is

Accepted Answer

A) a franchise. 
B) none of the choices. 
C) an agency relationship. 
D) a sole proprietorship.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Kari owns and operates Living Earth Garden Shop,an outdoor tool and landscaping supplies retail store,as a sole proprietorship. When Kari dies,Living Earth will automatically

Accepted Answer

A) cease to continue. 
B) pass to Kari's heirs. 
C) pass to the state. 
D) be offered for sale to its creditors and competitors.

Question 4

Wren owns and operates Yoga Center without creating a separate business organization. She receives all the profits from the fees for the classes and the sales of the center's merchandise. Yoga Center is most likely

Accepted Answer

A) a partnership. 
B) a franchise. 
C) a sole proprietorship. 
D) none of the choices.

Question 5

Without creating a separate business organization,Reynold starts up,and assumes the financial risk of,Sole Savers,a new,pre-owned auto sales enterprise. Reynold is

Accepted Answer

A) a partner. 
B) a franchisor. 
C) a franchisee. 
D) a sole proprietor.

Question 6

Traditionally,entrepreneurs have used one major business form-the sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 7

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 writing or in electronic form

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.

Question 8

Bill sells Corner Deli & Groceries,a sole proprietorship,to Diane. This is

Accepted Answer

A) a franchise. 
B) not a transfer of ownership without the approval of the other owners of the business. 
C) not a transfer of ownership because a sole proprietorship cannot be transferred. 
D) a transfer of the ownership of the business.

Question 9

A franchisee is generally economically independent of the franchisor's integrated business system.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Any lawsuit against the business does not lead to unlimited personal liability for the owner of a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 14

We-Haul Equipment Rentals,Inc.,uses a Web site to provide downloadable in-formation to prospective franchisees. This electronic 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) no federal statute or rule.

Question 15

A sole proprietorship offers less flexibility than does a partnership or a corporation.

Accepted Answer

A) True 
 B)False

Question 16

Fletcher buys a Greesy's Burgers,Inc.,franchise. Greesy's requires that its franchisees buy its products exclusively for every phase of their operations. Because Fletcher wishes to buy less expensive products,he challenges the requirement. His best argument is probably that the requirement violates

Accepted Answer

A) the implied covenant of good faith and fair dealing. 
B) the Federal Trade Commission's Franchise Rule. 
C) federal antitrust laws. 
D) Greesy's marketing image.

Question 17

Mucho Tacos,Inc.,sells franchises. Mucho Tacos imposes on its franchisees standards of operation and personnel training methods. What is the potential pitfall to Mucho Tacos if it exercises too much control over its franchisees?

Accepted Answer

The answer of Mucho Tacos,Inc.,sells franchises. Mucho Tacos imposes on...

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

The day-to-day operation of the franchise business normally is under the control of the franchisor.

Accepted Answer

A) True 
 B)False

Question 20

To protect franchisees against arbitrary of bad faith termination,state law may prohibit termination without good cause.

Accepted Answer

A) True 
 B)False

Exam 30: Sole Proprietorships and Franchises

Challenge Games Corporation licenses the trademarks to its products to Direct Marketing,Inc.,to reproduce on caps,sweatshirts,and similar goods for sale. This is

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

Kari owns and operates Living Earth Garden Shop,an outdoor tool and landscaping supplies retail store,as a sole proprietorship. When Kari dies,Living Earth will automatically

Wren owns and operates Yoga Center without creating a separate business organization. She receives all the profits from the fees for the classes and the sales of the center's merchandise. Yoga Center is most likely

Without creating a separate business organization,Reynold starts up,and assumes the financial risk of,Sole Savers,a new,pre-owned auto sales enterprise. Reynold is

Traditionally,entrepreneurs have used one major business form-the sole proprietorship.

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 writing or in electronic form

Bill sells Corner Deli & Groceries,a sole proprietorship,to Diane. This is

A franchisee is generally economically independent of the franchisor's integrated business system.

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

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

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

Any lawsuit against the business does not lead to unlimited personal liability for the owner of a sole proprietorship.

We-Haul Equipment Rentals,Inc.,uses a Web site to provide downloadable in-formation to prospective franchisees. This electronic information is the equivalent of an offer that must comply with

A sole proprietorship offers less flexibility than does a partnership or a corporation.

Fletcher buys a Greesy's Burgers,Inc.,franchise. Greesy's requires that its franchisees buy its products exclusively for every phase of their operations. Because Fletcher wishes to buy less expensive products,he challenges the requirement. His best argument is probably that the requirement violates

Mucho Tacos,Inc.,sells franchises. Mucho Tacos imposes on its franchisees standards of operation and personnel training methods. What is the potential pitfall to Mucho Tacos if it exercises too much control over its franchisees?

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.

The day-to-day operation of the franchise business normally is under the control of the franchisor.

To protect franchisees against arbitrary of bad faith termination,state law may prohibit termination without good cause.