Deck 5: Significant Hospitality Contracts

Question 1

A well-developed group lodging contact will include detailed language about a variety of items including how room rates will be calculated if the contract is signed prior to the establishment of the group's final room rates.

Answer 1

True

Question 2

A hospitality manager may be responsible for which type of legal agreement(s)?

A) Franchise Agreements
B) Management Agreements
C) Supply Agreements
D) Employment Agreements
E) All of the above.

Answer 2

E

Question 3

Which government agency regulates unfair or deceptive trade practices in the offering of franchises?

A) Federal Trade Commission
B) Department of Franchise Offerings and Securities
C) Department of Justice
D) Attorney General
E) Franchise Enforcement Commission

Answer 3

A

Question 4

A Management Agreement is the legal agreement that defines the responsibilities of a business owner and the management company chosen to operate the owner's business.

Question 5

Attrition in hospitality means ______.

A) The loss of previously estimated guest counts
B) The parties do not have a meeting of the minds.
C) The contract is illegal and thus unenforceable.
D) The scheduled function has relocated to another city.

Question 6

According to the law, franchisors must provide potential investors with a basic disclosure document and are required to guarantee a profit to the franchisee in the third year of the franchise operation.

Question 7

Which of the following is not an advantage when purchasing a franchise?

A) Obtain a proven concept
B) National name recognition
C) National advertising support
D) Sensitivity to menu items for local clientele

Question 8

Indemnification means to make one whole; to reimburse for a loss already incurred.

Question 9

Signs such as "Swim at Your Own Risk" would be a good example of what type of contractual provision?

A) Merger Clause
B) Adhesion Clause
C) Exculpatory Clause
D) Indemnification Clause

Question 10

Which of the following is a major element of management agreements?

A) Incentives fees earned or penalties assessed related to operating performance
B) Insurance requirements of the management company (who must carry the insurance and how much)
C) The control, if any, that the owner has in the selection or removal of the business's management personnel.
D) All of the above.

Question 11

Which of the following represents a fee that is ordinarily paid by the franchisee to the franchisor?

A) Franchise application fee
B) Earnings percentage (royalty fee)
C) Advertising participation (marketing fee)
D) All of the above.

Question 12

The country of China strictly prohibits franchising by businesses.

Question 13

The Federal Trade Commission is tasked with verifying the information contained in all disclosure documentation provided by the franchisor to a prospective franchisee.

Question 14

In the lodging industry, payment can be made if the hotel agrees to directly bill the company or group for all the charges.

Question 15

Franchisors are not required to disclose the restrictions on what the franchisee may sell in the franchise business and how it may be sold.

Question 16

One of the most important components of conference services contacts is the language used to establish and assign responsibility for the group's _________.

A) Room size
B) Master Bill
C) Food and Beverage order
D) None of the above

Question 17

The person or business that has sold and/or granted a franchise is the _______.

A) Franchisee
B) Franchisor
C) Management Company
D) Licensee

Question 18

An operating agreement is the same document as a management agreement.

Question 19

Exculpatory clauses seek to put blame on the hospitality operator in certain situations.

Question 20

A well drafted conference service contract will contain a provision for cancellation by the group. If a group decreases the number of contracted attendees, this is known as _____ and a provision should also be stated in the conference service contract.

A) Merger
B) Arbitration
C) Mitigation of damages
D) Attrition