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Exam 16: Small Businesses and Franchapter Ises

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Question 21

Multiple Choice

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Espresso Brew Inc. uses a Web site to provide downloadable information to prospective franchisees. This electronic information is the equivalent of an offer that must comply with

A) no law.
B) federal antitrust laws.
C) the Federal Trade Commission's Franchise Rule.
D) the Dealers Day in Court Act.

E) A) and C)
F) C) and D)

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Question 22

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When the owner of a sole proprietorship dies, the business does not dissolve-it is automatically transferred to family members or other heirs.

A) True
B) False

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Question 23

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

To make a loan, the U.S. Small Business Administration requires the owners of a business to put some of their own funds at risk in the business.

eSports Inc. offers entrepreneurs the opportunity to operate a franchise under the eSports trade name as the owner of a game-playing venue. To possible franchisees, eSports makes earnings claims. For those claims, the franchisor

In many instances, agency law governs the relationships among partners.

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

The law considers all new businesses to be sole proprietorships.

Donuts Whole Inc. offers an entrepreneur the opportunity to operate a franchise bakery under the Donuts Whole trade name. Before a franchise contract is signed, Donuts Whole must explain

Among the factors an entrepreneur will consider in selecting an organizational form for a business are tax considerations.

The essential elements of a partnership do not include

To avoid conflicts with the First Amendment, no state requires a franchisor to submit ads aimed at prospective franchisees to the state for approval.

A court can order the dissolution of a partnership if the business can only be operated at a loss.

Bayard organized, and owns and operates, Cypress Tours in the simplest form of business organization. This is

When a person who is not a partner holds himself or herself out as a partner, a court may impose liability-and partnership rights-on the alleged partner.

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

A partner can be held liable for a partnership obligation only if he or she participated in, or knew about, whatever it was that gave rise to the obligation.

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

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

Beth and Connie do business as Dig Excavators. In acting on the firm's behalf, Beth makes an honest error in underestimating the cost of a certain project. In this situation, to her firm, Beth is liable for a breach of the duty of