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Exam 29: Sole Proprietorships and Franchises

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Question 21

Multiple Choice

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Sauces n' Syrups,Inc.,and Thad's Sweet & Spicy Bottling Plant have a manufacturing franchise arrangement.This involves the transfer of

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

E) A) and C)
F) None of the above

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Question 22

True/False

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No state requires franchisors to provide presale disclosures to prospective franchisees.

A) True
B) False

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Question 23

Multiple Choice

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Fact Pattern 29-1 (Questions B10-B11 apply) 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 29-1.Jumbo Juice makes earnings claims to potential investors.For those claims,the franchisor

A franchisor can suggest retail prices for the goods that a franchisee sells but cannot mandate them.

Paradise Footwear buys a franchise from Quadrangle Athletic Shoes,Inc.This relationship,like all other franchise relationships,is governed by

Sasha contracts to buy a franchise from TrustMe Financial Consultants,Inc.The contract is silent on the issue of territorial rights.When TrustMe allows a competing franchise to be established near Sasha's office,she suffers a significant loss in profits.This is most likely a violation of

Rooster Red,LLC,grants a franchise to Qiana to open and operate a Rooster Red restaurant.Rooster Red will likely charge Qiana

Rini,the owner of Simply Sushi,is a sole proprietor.What are the chief characteristics,advantages,and disadvantages of this form of business organization Rini wants to obtain additional capital to expand Simply Sushi,but she does not want to lose control of the firm.As a sole proprietor,what is her best option to attain these goals

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

Kari is the sole proprietor of Living Earth Garden Shop.As a sole proprietor,on the business's profits,Kari pays

In choosing a form of business organization for a new enterprise,important factors include the ability to raise capital.

When a franchise agreement contains a notice-and-cure provision,a franchisee's breach of the duty of honesty and fidelity is not enough to allow the franchisor to terminate the franchise.

In a manufacturing arrangement,a franchisor transmits to a franchisee the essential ingredients or formula to make a particular product.

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

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.

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 franchisee is induced to enter into a franchise contract by the franchisor's fraudulent misrepresentation,the franchisor may be liable for damages.

Instead of setting up a business to market her own products,Rita considers entering into a distributorship franchise with Sports Equipment Corporation.This involves the transfer of

Silvano owns Textbooks Plus,a sole proprietorship that sells textbooks and other school supplies.When Silvano dies,Textbooks Plus will automatically

Level Fencing Company wants to present information in "disclosure documents" via the Internet to prospective franchisees.Among other legal requirements with which Level Fencing must comply,prospective franchisees must