Question 1

A franchisee ordinarily does not pay a fee for a franchise license (the privilege of being granted a franchise).

Accepted Answer

A) True 
 B)False

Question 2

A number of states require franchisors to provide presale disclosures to prospective franchisees.

Accepted Answer

A) True 
 B)False

Question 3

Haute Dogs, Inc., sells a franchise to Irene's Cuisine, a lunch truck. Irene's Cuisine is​

Accepted Answer

A)   ​a franchisee.
B)   ​a franchisor.
C)   ​a partner.
D)   ​a principal.E) B) and C)
F) C) and D)

Question 4

Fong contracts to buy a franchise from Genuine Asian Sushi House Company. In this contract, as in most franchise contracts, the determination of the territory to be served is made by

Accepted Answer

A)   ​other Genuine Asian franchisees within the same state.
B)   ​Fong.
C)   ​Genuine Asian Sushi House.
D)   ​the Federal Trade Commission.E) A) and D)
F) A) and B)

Question 5

Ken owns and operates Living Earth Garden Shop as a sole proprietorship. When Ken dies, Living Earth will automatically

Accepted Answer

A)   ​dissolve.
B)   ​pass to Ken's heirs.
C)   ​pass to the state.
D)   ​be offered for sale to its creditors and competitors.E) A) and B)
F) A) and C) A

Question 6

Nina, the owner of Organic Farm, a sole proprietorship, wants to obtain additional capital to operate. This can be accomplished by

Accepted Answer

A)   ​a bank loan.
B)   ​a Small Business Administration Loan.
C)   ​a state grant.
D)   ​any of the choices.E) A) and C)
F) A) and B)

Question 7

A sole proprietor does not own the entire business.

Accepted Answer

A) True 
 B)False  False

Question 8

Flynn buys a Greasy Burger, Inc., franchise. Greasy requires that its franchisees buy its products exclusively for every phase of their operations. Because Flynn 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)   ​the franchisor's marketing image.E) All of the above
F) B) and C)

Question 9

Cathy buys an exclusive territory in which she is authorized to set up a plant to make Delite Dairy products. After receiving the recipes, Cathy begins making Evie's-brand yogurt and other Delite products. This is

Accepted Answer

A)   ​a chain-style franchise.
B)   ​a distributorship franchise.
C)   ​a manufacturing franchise.
D)   ​not a franchise.E) B) and D)
F) A) and D)

Question 10

Most franchise contracts provide that notice of termination must be given.

Accepted Answer

A) True 
 B)False

Question 11

Oberon buys a Pro Club Health & Fitness, Inc., franchise, which the franchisor later terminates. In determining whether the termination was proper, a court will generally

Accepted Answer

A)   ​balance the rights of both parties.
B)   ​emphasize the right of Pro Club to its business operation.
C)   ​focus on the right of Oberon to be dealt with fairly.
D)   ​underscore the interest of consumers in affordability.E) All of the above
F) C) and D)

Question 12

Frank enters into an agreement with Grab n' Eat Burgers, Inc., to operate a franchise in Homeville. Later, the franchisor grants franchises to others within the same territory, causing Frank to suffer a significant loss in profits. In Frank's suit against the franchisor, his best argument is that Grab n' Eat

Accepted Answer

A)   ​violated the antitrust laws.
B)   ​violated the implied covenant of good faith and fair dealing.
C)   ​violated the Federal Trade Commission's Franchise Rule.
D)   ​granted Frank the first Grab n' Eat franchise in Homeville.E) A) and D)
F) B) and D)

Question 13

Del owns Everlast Painting, a sole proprietorship. Del's liability is

Accepted Answer

A)   ​limited by state statute and varies from state to state.
B)   ​limited to the extent of capital expenditures.
C)   ​limited to the extent of his or her original investment.
D)   ​unlimited.E) A) and D)
F) B) and C)

Question 14

In choosing a form of business organization for a new enterprise, important factors include tax considerations.

Accepted Answer

A) True 
 B)False  True

Question 15

Fact Pattern 36-1​
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales.
-Refer to Fact Pattern 36-1. Before a franchise contract is signed, Jumbo Juice must explain

Accepted Answer

A)   ​the contract's termination provisions.
B)   ​the nature and operation of a franchise.
C)   ​the laws governing franchising.
D)   all of the choices.E) B) and D)
F) None of the above

Question 16

State regulation of franchising is often aimed at protecting franchisees from unfair practices.

Accepted Answer

A) True 
 B)False

Question 17

The franchise agreement may specify whether the premises for the business must be leased or purchased outright.

Accepted Answer

A) True 
 B)False

Question 18

The laws governing franchising are primarily designed to protect franchisors from dishonest franchisees.

Accepted Answer

A) True 
 B)False

Question 19

Anyone who does business must create a separate business organization.

Accepted Answer

A) True 
 B)False

Question 20

State deceptive trade practices acts apply to actions by franchisors.

Accepted Answer

A) True 
 B)False

Exam 36: Small Businesses and Franchises

A franchisee ordinarily does not pay a fee for a franchise license (the privilege of being granted a franchise).

Correct Answer
verified

A number of states require franchisors to provide presale disclosures to prospective franchisees.

Correct Answer
verified

Haute Dogs, Inc., sells a franchise to Irene's Cuisine, a lunch truck. Irene's Cuisine is

Correct Answer
verified

Fong contracts to buy a franchise from Genuine Asian Sushi House Company. In this contract, as in most franchise contracts, the determination of the territory to be served is made by

Correct Answer
verified

Ken owns and operates Living Earth Garden Shop as a sole proprietorship. When Ken dies, Living Earth will automatically

Correct Answer
verified
A

Nina, the owner of Organic Farm, a sole proprietorship, wants to obtain additional capital to operate. This can be accomplished by

Correct Answer
verified

A sole proprietor does not own the entire business.

Correct Answer
verified
False

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

Correct Answer
verified

Cathy buys an exclusive territory in which she is authorized to set up a plant to make Delite Dairy products. After receiving the recipes, Cathy begins making Evie's-brand yogurt and other Delite products. This is

Correct Answer
verified

Most franchise contracts provide that notice of termination must be given.

Correct Answer
verified

Oberon buys a Pro Club Health & Fitness, Inc., franchise, which the franchisor later terminates. In determining whether the termination was proper, a court will generally

Correct Answer
verified

Correct Answer
verified

Del owns Everlast Painting, a sole proprietorship. Del's liability is

Correct Answer
verified

In choosing a form of business organization for a new enterprise, important factors include tax considerations.

Correct Answer
verified
True

Fact Pattern 36-1 Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales. -Refer to Fact Pattern 36-1. Before a franchise contract is signed, Jumbo Juice must explain

Correct Answer
verified

State regulation of franchising is often aimed at protecting franchisees from unfair practices.

Correct Answer
verified

The franchise agreement may specify whether the premises for the business must be leased or purchased outright.

Correct Answer
verified

The laws governing franchising are primarily designed to protect franchisors from dishonest franchisees.

Correct Answer
verified

Anyone who does business must create a separate business organization.

Correct Answer
verified

State deceptive trade practices acts apply to actions by franchisors.

Correct Answer
verified

Exam 36: Small Businesses and Franchises

A franchisee ordinarily does not pay a fee for a franchise license (the privilege of being granted a franchise).

Correct AnswerverifiedShow Answer

A number of states require franchisors to provide presale disclosures to prospective franchisees.

Correct AnswerverifiedShow Answer

Haute Dogs, Inc., sells a franchise to Irene's Cuisine, a lunch truck. Irene's Cuisine is​

Correct AnswerverifiedShow Answer

Fong contracts to buy a franchise from Genuine Asian Sushi House Company. In this contract, as in most franchise contracts, the determination of the territory to be served is made by

Correct AnswerverifiedShow Answer

Ken owns and operates Living Earth Garden Shop as a sole proprietorship. When Ken dies, Living Earth will automatically

Correct AnswerverifiedA

Nina, the owner of Organic Farm, a sole proprietorship, wants to obtain additional capital to operate. This can be accomplished by

Correct AnswerverifiedShow Answer

A sole proprietor does not own the entire business.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

Cathy buys an exclusive territory in which she is authorized to set up a plant to make Delite Dairy products. After receiving the recipes, Cathy begins making Evie's-brand yogurt and other Delite products. This is

Correct AnswerverifiedShow Answer

Most franchise contracts provide that notice of termination must be given.

Correct AnswerverifiedShow Answer

Oberon buys a Pro Club Health & Fitness, Inc., franchise, which the franchisor later terminates. In determining whether the termination was proper, a court will generally

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Del owns Everlast Painting, a sole proprietorship. Del's liability is

Correct AnswerverifiedShow Answer

In choosing a form of business organization for a new enterprise, important factors include tax considerations.

Correct AnswerverifiedTrue

Fact Pattern 36-1​ Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales. -Refer to Fact Pattern 36-1. Before a franchise contract is signed, Jumbo Juice must explain

Correct AnswerverifiedShow Answer

State regulation of franchising is often aimed at protecting franchisees from unfair practices.

Correct AnswerverifiedShow Answer

The franchise agreement may specify whether the premises for the business must be leased or purchased outright.

Correct AnswerverifiedShow Answer

The laws governing franchising are primarily designed to protect franchisors from dishonest franchisees.

Correct AnswerverifiedShow Answer

Anyone who does business must create a separate business organization.

Correct AnswerverifiedShow Answer

State deceptive trade practices acts apply to actions by franchisors.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Haute Dogs, Inc., sells a franchise to Irene's Cuisine, a lunch truck. Irene's Cuisine is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
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Correct Answer
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False

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified
True

Fact Pattern 36-1 Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales. -Refer to Fact Pattern 36-1. Before a franchise contract is signed, Jumbo Juice must explain

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified