Exam 36: A: Sole Proprietorships and Franchises

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?

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Question 1

Correct Answer:

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Too much control may result in the franchisor's liability for the torts of a franchisee's employees.For example,if the franchisor has a right to control the franchisee's operations and exercises this right to a significant degree,and an employee under this control acts in a tortious or criminal manner that results in an injury to another,the franchisor may be held vicariously liable.

Mello Coffee Shops,Inc. ,sells a franchise to Noah's Arch,a café.Mello is

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Question 2

Correct Answer:

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A franchisor may retain stringent control over the training of personnel involved the operation of a franchise.

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(True/False)

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Question 3

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True

Euro Autos & Trucks,Inc. ,licenses Downtown Motors,an auto?mobile dealership,to sell its products.This is

(Multiple Choice)

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Question 4

Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant.Pronto will likely charge Omar

(Multiple Choice)

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Question 5

Kelly,the owner of Llama Farms,a sole proprietorship,wants to obtain additional busi?ness capital but to maintain control.This can best be ac?complished by

(Multiple Choice)

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Question 6

A franchisor can set the retail prices for the goods that a franchisee sells.

(True/False)

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Question 7

A sole proprietor has unlimited liability for all obligations that arise in doing business.

(True/False)

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Question 8

The parties to a franchise arrangement may be two corporations.

(True/False)

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Question 9

A franchisor is entitled to use fraud to induce a prospective franchisee to enter into a franchise.

(True/False)

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Question 10

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

(True/False)

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Question 11

Most franchise agreements provide that notice of termination of a fran?chise is not necessary.

(True/False)

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Question 12

A court will not provide a remedy for the "wrongful" termination of a franchise relationship.

(True/False)

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Question 13

Princely Auto Detailing Corporation gives notice to Quint that Princely is terminating their franchise arrangement.Winding up the business requires

(Multiple Choice)

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Question 14

A franchise agreement may specify that the premises for the business must be leased.

(True/False)

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Question 15

Vim+Vigor Fitness Corporation uses a Web site to provide downloadable information to prospective franchises.This online information is the equiva?lent of an offer that must comply with

(Multiple Choice)

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Question 16

In raising capital,a sole proprietor is limited to his or her personal funds-a personal loan is not possible.

(True/False)

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Question 17

A sole proprietor owns the entire business but doe not receive all of the profit.

(True/False)

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Question 18

A franchisee can operate as an independent businessperson but obtain the advantages of a national organization.

(True/False)

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Question 19

Rafe is interested in buying a franchise from Sportz Warez Company.In this transaction,the Federal Trade Commission's Franchise Rule

(Multiple Choice)

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Question 20

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Exam 36: A: Sole Proprietorships and Franchises

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?

Mello Coffee Shops,Inc. ,sells a franchise to Noah's Arch,a café.Mello is

A franchisor may retain stringent control over the training of personnel involved the operation of a franchise.

Euro Autos & Trucks,Inc. ,licenses Downtown Motors,an auto?mobile dealership,to sell its products.This is

Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant.Pronto will likely charge Omar

Kelly,the owner of Llama Farms,a sole proprietorship,wants to obtain additional busi?ness capital but to maintain control.This can best be ac?complished by

A franchisor can set the retail prices for the goods that a franchisee sells.

A sole proprietor has unlimited liability for all obligations that arise in doing business.

The parties to a franchise arrangement may be two corporations.

A franchisor is entitled to use fraud to induce a prospective franchisee to enter into a franchise.

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

Most franchise agreements provide that notice of termination of a fran?chise is not necessary.

A court will not provide a remedy for the "wrongful" termination of a franchise relationship.

Princely Auto Detailing Corporation gives notice to Quint that Princely is terminating their franchise arrangement.Winding up the business requires

A franchise agreement may specify that the premises for the business must be leased.

Vim+Vigor Fitness Corporation uses a Web site to provide downloadable information to prospective franchises.This online information is the equiva?lent of an offer that must comply with

In raising capital,a sole proprietor is limited to his or her personal funds-a personal loan is not possible.

A sole proprietor owns the entire business but doe not receive all of the profit.

A franchisee can operate as an independent businessperson but obtain the advantages of a national organization.

Rafe is interested in buying a franchise from Sportz Warez Company.In this transaction,the Federal Trade Commission's Franchise Rule

A: Introduction to Law and Legal Reasoning

B: Introduction to Law and Legal Reasoning

C: Introduction to Law and Legal Reasoning

D: Introduction to Law and Legal Reasoning

A: Courts and Alternative Dispute Resolution

B: Courts and Alternative Dispute Resolution

A: Court Procedures

B: Court Procedures

A: Constitutional Authority to Regulate Business

B: Constitutional Authority to Regulate Business

A: Ethics and Business Decision Making

B: Ethics and Business Decision Making

A: Intentional Torts and Privacy

B: Intentional Torts and Privacy

A: Negligence and Strict Liability

B: Negligence and Strict Liability

C: Negligence and Strict Liability

D: Negligence and Strict Liability

A: Intellectual Property and Internet Law

B: Intellectual Property and Internet Law

A: Criminal Law and Cyber Crimes

B: Criminal Law and Cyber Crime

A: Nature and Terminology

B: Nature and Terminology

C: Nature and Terminology

D: Nature and Terminology

A: Agreement in Traditional and E-Contracts

B: Agreement in Traditional and E-Contracts

A: Consideration

B: Consideration

A: Capacity and Legality

B: Capacity and Legality

A: Mistakes,fraud,and Voluntary Consent

B: Mistakes,fraud,and Voluntary Consent

A: The Statute of Frauds

B: The Statute of Frauds

A: Third Party Rights

B: Third Party Rights

A: Performance and Discharge

B: Performance and Discharge

A: Breach of Contract and Remedies

B: Breach of Contract and Remedies

A: The Formation of Sales and Lease Contracts

B: The Formation of Sales and Lease Contracts

C: The Formation of Sales and Lease Contracts

D: The Formation of Sales and Lease Contracts

A: Title,risk,and Insurable Interest

B: Title,risk,and Insurable Interest

A: Performance Breach of Sales Lease Contracts

B: Performance Breach of Sales Lease Contracts

A: Warranties and Product Liability

B: Warranties and Product Liability

A: International Law in a Global Economy

B: International Law in a Global Economy

A: The Function Creation of Negotiable Instruments

B: The Function Creation of Negotiable Instruments

C: The Function Creation of Negotiable Instruments

D: The Function Creation of Negotiable Instruments

A: Transferability and Holder in Due Course