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Q:
Star Resorts Corporation wants to terminate its franchise arrangement with Tony. Their contract does not provide for notice of termination or set a time for winding up the business. This means that to wind up, Tony
a. has a reasonable time, with notice.
b. has whatever time A determines, with or without notice.
c. is entitled to notice, but nothing more.
d. must close immediately.
Q:
A franchise agreement between Simple Software Company and Total Game, Inc., is silent on a time for termination of the franchise. Simple may
a. never terminate.
b. terminate at any time.
c. terminate on reasonable notice.
d. terminate on three days notice.
Q:
Pricey Auto Corporation gives notice to Quint that Pricey is terminating their franchise arrangement. Winding up the business requires
a. a new franchise agreement.
b. nothing more than closing immediately.
c. Quint's death, disability, or insolvency.
d. the return of Pricey's property.
Q:
Rita buys a Super Grill franchise. Super Grill requires that its franchisees buy its products for every phase of their operations. Because Rita wishes to buy less expensive products, she challenges the requirement. Her best argument is probably that the requirement violates
a. the commerce clause.
b. the Equal Protection Clause.
c. the federal antitrust laws.
d. the First Amendment.
Q:
Sweet Styles, Inc., a franchisor of clothing stores, wishes to standardize the pricing practices of its franchisees that have engaged in price-cutting to increase their respective shares of the market. The most prudent action might be for Sweet to
a. mandate the prices at which its franchisees sell their products.
b. suggest the prices at which its franchisees sell their products.
c. require its franchisees to buy inventory exclusively from Sweet.
d. threaten its franchisees with a material breach of contract.
Q:
Fern contracts to buy a franchise from Gooseberry Grocers, Inc. The contract is silent on the issue of territorial rights. Gooseberry 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
a. no law.
b. the ban on certain types of anticompetitive agreements.
c. the Federal Trade Commission's Franchise Rule.
d. the implied covenant of good faith and fair dealing.
Q:
Echo enters into an agreement with Deep Pan Pies, Inc., to operate a franchise in Centre City. Later, Deep grants franchises to others within the city. Echo files a suit to close them. If the court rules in Echo's favor it will most likely be on the ground that
a. Deep violated the antitrust laws.
b. Deep violated the implied covenant of good faith and fair dealing.
c. Echo paid a franchise fee.
d. Echo was the first Deep franchisee in Centre City.
Q:
Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant. Pronto will likely charge Omar
a. an initial fee or lump sum price for the franchise license.
b. a percentage of Omar's weekly payroll expense.
c. an amount of Omar's monthly overhead savings, if any.
d. none of the choices.
Q:
Flip Gymnastics & Karate, Inc., grants a franchise to Gibby to operate a Flip gym. Flip may require Gibby to pay the franchisor a percentage of his
a. annual sales or volume of business.
b. weekly payroll expense.
c. monthly overhead savings.
d. none of the choices.
Q:
Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide rods and reels in a certain area. Their franchise agreement requires Gage to pay certain administrative expenses. Their agreement may also require Gage to pay a percentage of the franchisor's
a. advertising costs.
b. personal expenses.
c. retirement income.
d. none of the choices.
Q:
Cluckee Chick"n Corporation provides its prospective franchisees with projected earnings figures based on actual data. Cluckee Chick"n must also disclose
a. the number and percentage of franchisees that achieved the figures.
b. hypothetical examples of potential earnings.
c. an answer to the entrepreneur's question, "How much will I make?"
d. none of the choices.
Q:
Pilar is interested in buying a franchise from Quixotic Travel & Tours Corporation. Quixotic must disclose material facts that Pilar needs to make an informed decision concerning this purchase, according to
a. no law.
b. the Petroleum Marketing Practices Act of 1979.
c. the Federal Trade Commission's Franchise Rule.
d. the Uniform Commercial Code.
Q:
In-Home Maid Service Company uses a Web site to provide downloadable information to prospective franchises. This online information is the equivalent of an offer that must comply with
a. the Automobile Dealers' Franchise Act of 1965.
b. no law.
c. the Federal Trade Commission's Franchise Rule.
d. the state Franchise Disclosure Document, or FDD.
Q:
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales.
Jumbo Juice makes earnings claims to potential investors. For those claims, the franchisor must have
a. a hypothetical basis.
b. a reasonable basis.
c. an actual basis.
d. no basis.
Q:
Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name as a member of a select group of dealers that engage in retail juice sales.
To potential investors, Jumbo Juice must provide
a. actual earnings figures.
b. hypothetical earnings figures.
c. projected earnings figures.
d. none of the choices.
Q:
Otis is interested in buying a franchise from Plentiful Inc. This transaction, like other franchise deals, is regulated to protect
a. certain types of anticompetitive agreements.
b. franchisors from dishonest prospective franchisees.
c. prospective franchisees from dishonest franchisors.
d. the government's power to restrict freedom of contract.
Q:
Frooty Drinks, Inc., and Great Gulp Bottling Company have a processing-plant franchise arrangement. This involves the transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
Q:
Pepsi-Cola Bottling Company is
a. a chain-style franchise.
b. a distributorship franchise.
c. a manufacturing franchise.
d. not a franchise.
Q:
Paradise Footwear buys a franchise from Reliant Athletic Shoes Inc. This relationship, like all other franchise relationships, is governed by
a. contract law.
b. no law.
c. the Franchise Disclosure Document, or FDD.
d. the rules of the National Collegiate Athletic Association.
Q:
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
a. a chain-style franchise.
b. a distributorship franchise.
c. a manufacturing franchise.
d. no franchise.
Q:
CheezBurger Heaven, Inc., conducts a chain-style franchise. This involves the transfer to Clive, one of its franchisees, of
a. a license.
b. a trade name.
c. the formula to make a product.
d. the ownership of the business.
Q:
Instead of setting up a business to market her own products, Krissy considers entering into a distributorship franchise with Little Breweries Corporation. This involves the transfer of
a. a license.
b. a trade name.
c. the formula to make a certain product.
d. the ownership of the business.
Q:
Events Promotion Corporation licenses trademarks to Fandom Souvenirs, Inc., to use in selling caps, sweatshirts, and similar goods. This is
a. a franchise.
b. an entrepreneur.
c. a principal-agent relationship.
d. a sole proprietorship.
Q:
Mello Coffee Shops, Inc., sells a franchise to Noah's Arch, a caf. Mello is
a. a franchisee.
b. a franchisor.
c. an agent.
d. a principal.
Q:
Worldwide Realtors, Inc., sells a franchise to XL Sales Company. XL is
a. a franchisee.
b. a franchisor.
c. an agent.
d. a principal.
Q:
Jody owns KuppaJava Kiosks, a sole proprietorship. Jody's liability is
a. limited by state statute and varies from state to state.
b. limited to the extent of capital expenditures.
c. limited to the extent of his or her original investment.
d. unlimited.
Q:
Robert owns Textbooks Plus, a sole proprietorship that sells textbooks. When Robert dies, Textbooks Plus will
a. be automatically dissolved.
b. pass directly to his oldest child.
c. pass directly to the state.
d. be evenly divided among all Robert's heirs.
Q:
Phillipa is the sole proprietor of Fun Floral Arrangements. As a sole proprietor, on Fun Floral Arrangements' profits, Phillipa
a. does not pay income taxes.
b. pays only personal income taxes.
c. is taxed twice.
d. pays both personal and sole proprietor income taxes.
Q:
Kelly, the owner of Llama Farms, a sole proprietorship, wants to obtain additional business capital but to maintain control. This can best be accomplished by
a. borrowing funds.
b. bringing in partners.
c. issuing stock.
d. selling the business.
Q:
Leigh wants to go into the business of construction contracting. Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be
a. its greater organizational flexibility.
b. its limited liability.
c. its perpetual existence.
d. the ease of transferring the business to other family members.
Q:
Julia owns and operates Collectable Dolls without creating a separate business organization. She receives all the profits from the doll sales. Collectable Dolls is most likely a
a. a corporation.
b. a limited liability company.
c. a partnership.
d. a sole proprietorship.
Q:
Cal sells "DownSize," a weight-reduction program, from a Web site, in competition with Eat-Less Inc.'s product "Fit "˜n Trim." Eat-Less files a suit against Cal, alleging in part that he is a sole proprietor, but his enterprise should be deemed a different form of business. Cal's enterprise should most likely be considered
a. a corporation because DownSize is sold online.
b. a franchisee because DownSize is sold in competition to Fit "˜n Trim.
c. a sole proprietorship because Cal is a sole proprietor.
d. no form of business entity because Cal has no formal organization.
Q:
In determining whether a franchisor acted in good faith in terminating a franchise relationship, a court would balance the rights of both parties.
Q:
A franchisor's decision to terminate a franchise may be made in the normal course of business operations.
Q:
The termination provision of a franchise contract is usually more favorable to the franchisor.
Q:
Much franchise litigation involves claims of wrongful termination.
Q:
Most franchise agreements provide that notice of termination of a franchise is not necessary.
Q:
The duration of a franchise is a matter to be determined between the parties.
Q:
A franchisor can require a franchisee to purchase certain supplies from the franchisor at an established price.
Q:
A franchisor can set the retail prices for the goods that a franchisee sells.
Q:
The validity of a provision permitting the franchisor to establish and enforce certain quality standards is questionable.
Q:
A franchise agreement may specify that the premises for the business must be leased.
Q:
Normally, a franchisee determines the territory that it will serve.
Q:
A franchisee normally pays an initial lump sum for a franchise license.
Q:
A franchisee may be required to pay for certain of the franchisor's administrative expenses.
Q:
A franchisee normally does not pay a fee for a franchise license until after the first year of using it.
Q:
If a party to a franchise contract fails to perform, he or she may be subject to a suit for breach of contract.
Q:
Some states require that a franchisor submit advertising aimed at prospective franchisees to the state for approval.
Q:
Some states require franchisors to provide presale disclosures to prospective franchisees.
Q:
The laws governing franchising are primarily designed to protect franchisors from dishonest franchisees.
Q:
In a manufacturing arrangement, a franchisor transmits to a franchisee the ingredients to make a particular product.
Q:
A franchise is a contractual arrangement.
Q:
Laws governing franchising are designed in part to prevent franchisors from terminating franchises without good cause.
Q:
A franchise exists when the owner of a trademark licenses its use to another party to sell goods or services.
Q:
A franchise exists when the owner of a copyright licenses its use to another party to sell goods or services.
Q:
A franchisee can operate as an independent businessperson but still obtain the advantages of a national organization.
Q:
A franchisor is the purchaser of a franchise.
Q:
A sole proprietorship lacks continuity on the death of the proprietor.
Q:
In raising capital, a sole proprietor is limited to his or her personal fundsa loan is not possible.
Q:
A sole proprietor has unlimited liability for all obligations that arise in doing business.
Q:
A sole proprietor must create a separate business organization to create a sole proprietorship.
Q:
In a sole proprietorship, the owner receives 90 percent of the profits and the government receives 10 percent.
Q:
In a sole proprietorship, the proprietor shares the burden of any losses or liabilities incurred by the business enterprise with the government.
Q:
A sole proprietor may own and manage any type of business.
Q:
The simplest form of business is a sole proprietorship.
Q:
In choosing a form of business organization for a new enterprise, important factors include the liability of the owner.
Q:
In choosing a form of business organization for a new enterprise, important factors include the ease of creation.
Q:
Doc's Sports Club enters into a franchise agreement with Elite Fitness Centers that provides for termination at any time for "cause." Doc's fails to meet Elite's "Friends and Family" membership sales quota. Is this "cause" for termination? Explain.
Q:
Owen plans to open Owen's Pets Store, a pet sales and pet supplies outlet, and to hire Quimby and Ruth. Owen will invest only his own money. He does not expect to make any profit for at least two years and to make almost no profit for the first three years, but he hopes to expand eventually. Which form of business organization would be most appropriate? What are the chief characteristics, advantages, and disadvantages of this form of business organization? If Owen wants to obtain additional capital to expand the business, but does not want to lose control of the firm, what is his best option?
Q:
For twenty years, Ozzie works for Players Paradise, a destination for vacationers from across the United States, maintaining golf carts. After a steady stream of positive job evaluations and merit pay raises, Ozzie is promoted to the position of supervisor of golf-cart maintenance at three of Players's courses. Five years later, a new employee, Quentin, is hired to oversee operations at all ten of Players's courses. Quentin demotes Ozzie, who is now over the age of forty, to running only one of the three cart facilities, and freezes his salary. Quentin demotes five other employees over the age of forty and places one of Ozzie's former facilities under the supervision of Richie, who is twenty-three. Ozzie overhears Richie say, "We"re going to have to do away with these old, senile men." Less than a year later, Quentin reconsolidates the three cart facilities' operations under Richie's charge. Ozzie quits and files a suit against Players for employment discrimination. Should he prevail? Explain.
Q:
Gelato Cheese Company, a major processor of cheese sold throughout the United States, employs one hundred workers at its principal processing plant. The plant is located in Heartland Corners, which has a population that is 50 percent white and 25 percent African American, with the balance Hispanic American, Asian American, and others. Gelato requires a high school diploma as a condition of employment for its cleaning crew. Three-fourths of the white population completed high school, compared with only one-fourth of those in the minority groups. Gelato has an all-white cleaning crew. Has Gelato violated the Civil Rights Act of 1964? Explain.
Q:
Jason and Katrina work on the loading dock for Longhaul Transport Company. Jason has a disability. Katrina has seniority. Jason asks for a transfer, which would represent an accommodation for his disability. Longhaul gives the transfer to Katrina on the basis of her seniority. Jason files a suit against Longhaul for discrimination on the basis of his disability. The court is most likely to rule that
a. Katrina's seniority is a good defense.
b. Jason's disability is a sufficient basis for relief.
c. Longhaul's action was a business necessity.
d. Longhaul's action was a reasonable accommodation.
Q:
Valerie is a pilot for Wayfarer Airlines. Wayfarer's policy is to restrict Valerie and its other pilots from flight responsibilities after a certain age. This is most likely
a. a legitimate bona fide occupational qualification.
b. discrimination on the basis of age.
c. reverse discrimination.
d. discrimination on the basis of disability.
Q:
Machine Corporation requires its employees to have a high school diploma, claiming a definite connection between a high school education and job performance. In a suit against Machine Corporation under Title VII, this requirement is shown to have a discriminatory effect. The employer has
a. no defense.
b. a bona fide occupational qualification defense.
c. a business necessity defense.
d. a seniority systems defense.
Q:
Silky Coordinates, a women's clothing store, employs female attendants to assist customers in the dressing rooms. Radley, a forty-one-year-old male, applies for an attendant's job, but is not hired. In Radley's suit against Silky for employment discrimination under Title VII, the store has
a. no defense.
b. a bona fide occupational qualification defense.
c. a business necessity defense.
d. a seniority systems defense.
Q:
Flynn is a drug addict who has completed a supervised drug-rehabilitation program. Gert used drugs casually in the past. Heath reports to work while under the influence of alcohol. Considered to have a disability under the Americans with Disabilities Act of 1990 is
a. Flynn.
b. Gert.
c. Heath.
d. all of the choices.
Q:
Beth, who has a disability, is an employee of Corporate Office Company (COC). After the installation of new doors on COC's building, Beth finds it nearly impossible to get in and out. For repeatedly failing to be on time, COC replaces Beth with Dian, who does not have a disability.
To successfully defend against Beth's claim, COC will have to show that
a. Beth consistently failed to meet the essential requirements of her job.
b. COC cannot make changes to the doors without undue hardship.
c. Dian is qualified for Beth's position.
d. the doors were not installed as an act of intentional discrimination.
Q:
Beth, who has a disability, is an employee of Corporate Office Company (COC). After the installation of new doors on COC's building, Beth finds it nearly impossible to get in and out. For repeatedly failing to be on time, COC replaces Beth with Dian, who does not have a disability.
To succeed with a claim against COC under the Americans with Disabilities Act, Beth will have to show that
a. Beth consistently met the essential requirements of her job.
b. COC refused to make reasonable accommodation for Beth.
c. Dian is unqualified for Beth's position.
d. the doors were installed as an act of intentional discrimination.
Q:
Dick works for First City Bank. When his spouse Elin is diagnosed with Lou Gehrig's disease, Dick asks to take temporary leave to care for her. First City discharges him. He files a suit against the bank under the Americans with Disabilities Act of 1990. Most likely, Dick can
a. recover for association discrimination.
b. recover for reverse discrimination.
c. recover for disparate-impact discrimination.
d. not recover.
Q:
Paula, a disabled person, applies for a job at Quantity Corporation for which she is well qualified, but for which she is rejected. Quantity continues to seek applicants and eventually fills the position with a person who is not disabled. Paula is most likely to succeed in a suit against Quantity for discrimination under the Americans with Disabilities Act of 1990 if she can show that
a. she was not hired solely because of her disability.
b. she can function well with corrective devices or on medication.
c. her disability causes her undue hardship.
d. she could not perform the job even with reasonable accommodation.