Exam 35: Sole Proprietorships and Franchises

A franchise exists when the owner of a trademark licenses its use to an?other party to sell goods or services.

Art is a franchisee of Bee Treats, Inc. Their contract gives Bee a right to control certain aspects of Art's operation, but assigns responsibility for employees to Art. Art hires Clay, who commits a crime against some of Art's customers, including Dina. Dina files a suit against Bee. With re?spect to Clay's crime, under the decision of the court in Case 35.2, Kerl v. Dennis Rasmussen, Inc., Bee is most likely

Fern contracts to buy a franchise from Green Grocery Company. The contract is silent on the issue of territorial rights. Green allows a competing franchise to be established near Fern's store, which suffers a significant loss in profits. This is most likely a violation of

Stacy contracts to buy a franchise from Tender Steak House Company. In this contract, as in most franchise contracts, the determination of the territory to be served is made by

If a party to a franchise contract fails to perform, he or she may be subject to a suit for breach of contract.

In choosing a form of business organization for a new enterprise, important factors include the titles of the organization's officers.

A franchisee is a party who sells a franchise.

A sole proprietorship is a separate legal entity for tax pur?poses.

In a chain-style business operation, a franchise operates under a franchisor's trade name.

Much franchise litigation involves claims of wrongful termination.

An agreement that requires a franchisee to buy materials exclusively from the franchisor may violate antitrust laws.

Frooty Drinx, Inc., and Gert have a processing-plant franchise arrange?ment. This involves the transfer of

A franchisee may be required to pay for certain of the franchisor's administrative expenses.

Opie buys a franchise from Paradise Clothing Corporation. Because this franchise relationship is, like all other franchise relationships, primarily of a certain type, it is governed by

A franchisee normally does not pay a fee for a franchise license until after the first year of using it.

Tasty Ice Cream Company is a franchisor. Uri operates a Tasty fran?chise. Vela is one of Uri's employees. As a franchisor, if Tasty controls the day-to-day operations of the business to a significant degree, it may be liable for intentional acts of discrimination by

Leo buys an exclusive territory in which he is authorized to set up a plant to make Midwest Dairy, Inc., products. After receiving the formula, Leo begins making Nice-brand ice cream and other Midwest products. This is

Otis is interested in buying a franchise from Plentiful Inc. This transaction, like other franchise deals, is regulated to protect

Caffeine Coffee Shops, Inc., sells franchises. Caffeine imposes on its fran?chi?sees standards of operation and personnel training methods. What is the potential pitfall to Caffeine if it exercises too much control over its fran?chisees?

Jim organized, and owns and operates, Jim's Landscaping Service in the simplest form of business organization. This is