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Exam 34: Small Businesses and Franchapterises

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Question 31

Multiple Choice

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Bob buys a Club Fitness Inc. franchise, which the franchisor later terminates. In determining whether the termination was proper, a court will generally

A) balance the rights of both parties.
B) emphasize the right of Club Fitness to its business operation.
C) focus on the right of Bob to be dealt with fairly.
D) underscore the interest of consumers in affordability.

E) A) and B)
F) A) and C)

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Question 32

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Case law governing franchising emphasizes the importance of good faith and fair dealing.

A) True
B) False

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Question 33

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The proprietor pays only personal income taxes on a sole proprietorship's profits.

Sean buys a franchise from Taco Mission Inc. This relationship, like all other franchise relationships, is governed by

Tasty Wings LLC wants to present information in "disclosure documents" via the Internet to prospective franchisees. Among other legal requirements with which the franchisor must comply, prospective franchisees must

Among the factors an entrepreneur will consider in selecting an organizational form for a business is the liability of the owners for the acts of the firm.

Flynn is interested in buying a franchise from Gas Up Inc. The franchisor must disclose material facts that Flynn needs to make an informed decision concerning this purchase, according to

Nina, the owner of Organic Farm, a sole proprietorship, wants to obtain additional capital to operate. This can be accomplished by

Without creating a separate business organization, Rey starts up Street Cruisers, a pre-owned auto sales enterprise. This enterprise is

Del owns Everlast Painting, a sole proprietorship. Del's liability is

Riki contracts to buy a franchise from Sushi Inc. In this contract, as in most franchise contracts, the determination of the territory to be served is made by

Gary buys from Hook, Line & Sinker Corporation the exclusive right to sell its trademarked fishing gear in a certain area. Their franchise agreement requires Gary to pay certain administrative expenses. Their agreement may also require the franchisee to pay a percentage of the franchisor's

A franchisee's breach of the duty of honesty and fidelity is not enough to allow a franchisor to terminate a franchise if their contract contains a notice-and-cure provision.

Maeve sells New Energy, a sole proprietorship that makes and sells solar panels, to Olaf. This is

A franchise contract cannot give exclusive territorial rights to a certain geographic area to a franchisee, due to antitrust laws.

Anyone who does business must create a separate business organization.

Any business-except a sole proprietorship-must comply with state tax registration requirements.

Carl starts up, and assumes the financial risk of, DataWorks, a new marketing enterprise. As a sole proprietorship, the enterprise must meet legal requirements relating to

Cathy buys an exclusive territory in which she is authorized to set up a plant to make Delite dairy products. After receiving the recipes, Cathy begins making Evie's-brand yogurt and other Delite products. This is

Raceway LLC licenses the trademarks to its products to Stadium Markets Inc. to reproduce on clothing and other goods for sale. This is