Question 1

In a joint venture partnership,each joint venturer is liable for the debts and obligations of the joint venture partnership.

Accepted Answer

A) True 
 B)False

Question 2

In a distributorship franchise,the franchisor provides a secret formula or the like to the franchisee.

Accepted Answer

A) True 
 B)False

Question 3

What constitutes as just cause for the termination of franchisees? How can such causes be held unconscionable?

Accepted Answer

Most franchise agreements permit a franc

Question 4

________ is a business arrangement that occurs when the owner of intellectual property contracts to permit another party to use the intellectual property.

Accepted Answer

A)  General partnership 
B)  Leasing 
C)  Licensing 
D)  Joint venturing 
A)  General partnership 
B)  Leasing 
C)  Licensing 
D)  Joint venturing

Question 5

In a(n)________ 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)  chain-style 
B)  area 
C)  distributorship 
D)  processing plant 
A)  chain-style 
B)  area 
C)  distributorship 
D)  processing plant

Question 6

Joint venturers are shareholders of a joint venture corporation.

Accepted Answer

A) True 
 B)False

Question 7

Strategic alliances have the same protection as mergers,joint ventures,or franchising.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

________ fees are payments for any land or equipment leased from the franchisor,billed either as a flat monthly or an annual fee.

Accepted Answer

A)  Lease 
B)  Royalty 
C)  Assessment 
D)  Contingency 
A)  Lease 
B)  Royalty 
C)  Assessment 
D)  Contingency

Question 10

Which of the following documents sets forth the terms and conditions of a franchise?

Accepted Answer

A)  FTC disclosure document 
B)  franchise agreement 
C)  articles of incorporation 
D)  articles of organization 
A)  FTC disclosure document 
B)  franchise agreement 
C)  articles of incorporation 
D)  articles of organization

Question 11

The FTC franchise rule is a rule that requires prospective franchisees to make full presale disclosures to franchisors.

Accepted Answer

A) True 
 B)False

Question 12

According to the FTC franchise rule,a franchisor that makes sales or earnings projections based on real examples must disclose the number and percentage of actual franchises that have obtained such results.

Accepted Answer

A) True 
 B)False

Question 13

How do the liabilities of joint venturers differ based on the operating form of the venture?

Accepted Answer

If a joint venture is operated as a part

Question 14

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 
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 15

Zen's Choice,a chain of sports equipment stores,owns the real estate on which a franchisee operates its franchise.Zen's Choice's charges a franchisee rent,which is calculated as a percentage of monthly net sales.In this instance,the franchisee is paying ________ fees.

Accepted Answer

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

Question 16

Sky Toys,a chain of toy stores,charges its franchisees a fee for the use of its name that is approximately 12.5 percent of monthly gross sales.In this instance,the franchisees are paying ________ fees.

Accepted Answer

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

Question 17

Where does the FTC franchise notice appear?

Accepted Answer

A)  in the licensing agreement between the franchisor and franchise 
B)  as a separate clause in the franchise agreement 
C)  on the cover of a franchisor's required disclosure statement 
D)  on the cover of a franchisee's required disclosure statement 
A)  in the licensing agreement between the franchisor and franchise 
B)  as a separate clause in the franchise agreement 
C)  on the cover of a franchisor's required disclosure statement 
D)  on the cover of a franchisee's required disclosure statement

Question 18

Provide reasons why a franchisor may not be vicariously liable for the negligence of a franchisee.

Accepted Answer

If a franchise is properly organized and

Question 19

If a franchisor terminates a franchise agreement without just cause,the franchisee can sue the franchisor for ________ termination.

Accepted Answer

A)  rightful 
B)  illegal 
C)  legal 
D)  wrongful 
A)  rightful 
B)  illegal 
C)  legal 
D)  wrongful

Question 20

Discuss the business arrangements of a strategic alliance.How does it differ from the other forms of business arrangements?

Accepted Answer

A strategic alliance is an arrangement b

Exam 31: Franchise and Special Forms of Business

In a joint venture partnership,each joint venturer is liable for the debts and obligations of the joint venture partnership.

In a distributorship franchise,the franchisor provides a secret formula or the like to the franchisee.

What constitutes as just cause for the termination of franchisees? How can such causes be held unconscionable?

________ is a business arrangement that occurs when the owner of intellectual property contracts to permit another party to use the intellectual property.

In a(n)________ 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.

Joint venturers are shareholders of a joint venture corporation.

Strategic alliances have the same protection as mergers,joint ventures,or franchising.

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?

________ fees are payments for any land or equipment leased from the franchisor,billed either as a flat monthly or an annual fee.

Which of the following documents sets forth the terms and conditions of a franchise?

The FTC franchise rule is a rule that requires prospective franchisees to make full presale disclosures to franchisors.

According to the FTC franchise rule,a franchisor that makes sales or earnings projections based on real examples must disclose the number and percentage of actual franchises that have obtained such results.

How do the liabilities of joint venturers differ based on the operating form of the venture?

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

Zen's Choice,a chain of sports equipment stores,owns the real estate on which a franchisee operates its franchise.Zen's Choice's charges a franchisee rent,which is calculated as a percentage of monthly net sales.In this instance,the franchisee is paying ________ fees.

Sky Toys,a chain of toy stores,charges its franchisees a fee for the use of its name that is approximately 12.5 percent of monthly gross sales.In this instance,the franchisees are paying ________ fees.

Where does the FTC franchise notice appear?

Provide reasons why a franchisor may not be vicariously liable for the negligence of a franchisee.

If a franchisor terminates a franchise agreement without just cause,the franchisee can sue the franchisor for ________ termination.

Discuss the business arrangements of a strategic alliance.How does it differ from the other forms of business arrangements?

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