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Exam 36: Small Businesses and Franchises

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Question 31

Multiple Choice

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Teresa buys a franchise from Urgent Medical Clinics, LLC. If their agreement is like most franchise agreements, it will specify that Urgent Medical can terminate the franchise

A) ​at will.
B) ​for any reason.
C) ​for cause only.
D) ​for no reason.

E) C) and D)
F) None of the above

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Question 32

True/False

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A franchise agreement may allow the franchisee to cure a breach of the franchise agreement within a certain time so as to avoid termination.

A) True
B) False

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Question 33

Multiple Choice

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​Emma is interested in buying a franchise from Fine Jewelry, Inc. The franchisor must disclose material facts that Emma needs to make an informed decision concerning this purchase, according to

Rico, the owner of Simply Sushi, is a sole proprietor. What are the chief characteristics, advantages, and disadvantages of this form of business organization? Rico wants to obtain additional capital to expand Simply Sushi, but she does not want to lose control of the firm. As a sole proprietor, what is her best option to attain these goals?

Instead of setting up a business to market her own products, Rita considers entering into a distributorship franchise with Sports Equipment Corporation. This involves the transfer of

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

​Lee wants to go into the business of architectural design. Among the reasons that might convince Lee to set up his business as a sole proprietorship would be

A franchisor's decision to terminate a franchise is always considered wrongful.

Bill sells Corner Deli, a sole proprietorship, to Debra. This is

Diane organized, and owns and operates, Reliable Roofing, a construction outfit, in the simplest form of business organization. This is

Faye is interested in buying a franchise from Gas n' Snax Stores Inc. This transaction, like other franchise deals, is regulated to protect

Fact Pattern 36-1​ 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. -Refer to Fact Pattern 36-1. Jumbo Juice makes earnings claims to potential investors. For those claims, the franchisor

Mucho Tacos, Inc., sells franchises. Mucho Tacos imposes on its franchisees standards of operation and personnel training methods. What is the potential pitfall to Mucho Tacos if it exercises too much control over its franchisees?

Ford is the sole proprietor of Go, a game app subscription service. As a sole proprietor, on the business's profits, Ford pays

Fact Pattern 36-1​ 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. -Refer to Fact Pattern 36-1. To potential investors, Jumbo Juice must provide

Spicy Sauces, Inc., and Tom's Bottling Plant have a manufacturing franchise arrangement. This involves the transfer of

Made in the USA Clothing Inc. gives notice to Neely that it is terminating their franchise arrangement. Winding up the business requires

A franchisee is not generally legally independent of the franchisor.

Limited legal liability generally is necessary for small businesses that wish to raise outside capital.

When lending capital to a small business, a bank may require a personal guaranty of its repayment from the owner.