Chapter 35
Franchising:
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The Email address of an instructor to mail your quiz results:
1. A franchisor is the person to whom the franchise is granted.
a. True
b. False
2. Franchise contracts frequently contain an arbitration provision to deal with issues of franchise cancellation.
a. True
b. False
3. The franchisor is the person receiving the franchise.
a. True
b. False
4. Generally, franchisors can terminate the agreement without notice.
a. True
b. False
5. McDonald's Hamburgers is an example of a 'pure franchise.'
a. True
b. False
6. Logos are identifying symbols of goods or services.
a. True
b. False
7. Franchises lack the "passive investment" element associated with some securities because franchisees invest their own efforts in the franchise.
a. True
b. False
8. If a franchisor were to set retail prices for a franchisee, this action would constitute an antitrust violation.
a. True
b. False
9. Franchisees pay a special 'royalty' fee to franchisors.
a. True
b. False
10. A franchise agreement was found to exist in
East Wing Express, Inc. v. Airborne Freight Corporation
.
a. True
b. False
11. A rule requiring that a franchisor provide a disclosure statement to all prospective franchisees was adopted by the:
a. UCC.
b. Franchise Tax Board.
c. Securities and Exchange Commission.
d. Federal Trade Commission.
12. In
East Wind Express, Inc. v. Airborne Freight Corporation
, the court held no franchise existed because:
a. there was no agreement between the parties.
b. there were no franchise fees involved.
c. there was no identifiable product.
d. East Wind didn't market, sell, or distribute Airborne services.
13. Royalty fees are normally based on:
a. net sales.
b. gross sales
c. total investment.
d. taxable income.
14. Which of the following would not constitute a lawful rationale for a franchisor's termination of a franchise agreement?
a. Refusal by the franchisee to observe quality standards.
b. Inability of the franchisee to keep investments at an appropriate level.
c. Making room for a new franchisee in the same area.
d. Failure by the franchisee to meet sales quotas.
15. A franchisor seeks an assured distribution network in order to:
a. produce a more certain demand curve.
b. reduce wide fluctuations in sales.
c. bring about economies of scale in labor costs.
d. All of the above.
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