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Exam- Business Law Practice| 159 Questions & Answers Rated A+
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Exam- Business Law Practice| 159 Questions & Answers Rated A+
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Exam- Business Law Practice| 159 Questions &Answers Rated A+
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
Correct-a. its greater organizational flexibility.
Kelly, the owner of Llama Farms, a sole proprietorship, wants to obtain additional busi¬ness
capital but to maintain control. This can best be accomplished by Correct-a. borrowing
funds.
Hometown Realtors, Inc., sells a franchise to Group Sales Company. Group Sales is Correct-
a. a franchisee.
Mello Coffee Shops, Inc., sells a franchise to Noah's Arch, a café. Mello is Correct-b. a
franchisor.
Sylvester buys a franchise from Resistance Athletic Shoes Inc. This relationship, like all other
franchise relationships, is governed by Correct-a. contract law.
, Exam- Business Law Practice| 159 Questions &
Answers Rated A+
Nicole is interested in buying a franchise from Oz Oysters Inc. For Nicole to make an informed
decision concerning this purchase, Oz must disclose in writing or online Correct-b. material
facts such as the basis of projected earnings figures.
Vim+Vigor Fitness Corporation uses a Web site to provide downloadable information to
prospective franchises. This online information is the equivalent of an offer that must comply
with Correct-c. the Federal Trade Commission's Franchise Rule.
Dingo Bangles Company wants to present information in "disclosure documents" via the
Internet to prospective franchisees. Among other legal requirements with which Dingo must
comply, prospective franchisees must Correct-b. be able to download or save all electronic
documents.
Cluckee Chick' Corporation provides its prospective franchisees with projected earnings
figures based on actual data. Cluckee Chick' must also disclose Correct-a. the number and
percentage of franchisees that achieved the figures.
, Exam- Business Law Practice| 159 Questions &
Answers Rated A+
A franchise agreement between Software2 Company and Games3, Inc., is silent on a time for
termination of the franchise. Software2 may Correct-c. terminate on reasonable notice.
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
Correct-a. advertising costs.
Tawny buys a Super Grill franchise. Super Grill requires that its fran¬chi¬sees buy its products
for every phase of their op¬erations. Be¬cause Tawny wishes to buy less expensive products,
she challenges the re¬quirement. Her best argument is probably that the re¬quirement
violates Correct-c. the federal antitrust laws.
Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant.
Pronto will likely charge Omar Correct-a. an initial fee or lump sum price for the franchise
license.
, Exam- Business Law Practice| 159 Questions &
Answers Rated A+
Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to
pay the Circle C a percentage of his profits each month until the debt is paid. Because of this
agreement, the Circle C is Correct-b. Ben's creditor only.
Hollister and Gladys do business as partners in Frothy Confections. For federal income tax
purposes, Frothy Confections would be treated as Correct-a. a pass-through entity.
Parker and Oscar sign a partnership agreement to do business as "Parker's Plumbing" without
specifying a duration. This partnership is terminable Correct-a. at any time by either
partner.
Ryder and Sergei are partners in Timberline Gear, which sells mountain- and rock-climbing
equipment. Ryder manages the business. Unless the partnership agreement states otherwise,
Ryder is Correct-d. not entitled to compensation.
Trina and Uri do business as Value Gems. In acting on the firm's behalf in a deal with World
Diamond Exchange, Trina recklessly exceeds what Value Gems can afford to pay, causing
damage to the firm. Trina is Correct-a. liable for breach of the duty of care.
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