Sole Proprietorships and Franchises

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Questions

Question 1

Which business form is characterized as the simplest, where the owner is the business and no separate legal entity is created?

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Question 2

What is considered the primary disadvantage of operating a business as a sole proprietorship?

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Question 3

According to the text, what is the automatic legal consequence for a sole proprietorship upon the death of the owner?

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Question 4

In the case of Garden City Boxing Club, Inc. v. Dominguez, the fee for broadcasting prizefights was calculated as 20 dollars multiplied by what specific metric of the viewing establishment?

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Question 5

In the case study Garden City Boxing Club, Inc. v. Dominguez, why was Luis Dominguez, the owner of the sole proprietorship Antenas Enterprises, held personally liable for the company's violation of the Cable Communications Act?

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Question 6

Which type of franchise is characterized by a manufacturing concern licensing a dealer to sell its product, often within an exclusive territory, such as an automobile dealership?

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Question 7

What type of franchise arrangement involves the franchisee operating under the franchisor's trade name and being required to follow standardized methods of operation, as seen with fast-food chains?

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Question 8

A franchise where the franchisor provides the franchisee with the essential ingredients or a formula to create a product, which the franchisee then markets, is known as what type of arrangement?

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Question 9

What was the primary purpose of the Franchise Rule issued by the Federal Trade Commission (FTC) in 1978?

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Question 10

If a franchisor makes a sales projection based on actual data for a specific franchise location, what does the Franchise Rule require the franchisor to disclose?

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Question 11

In a franchise agreement, what is the term for the initial fee or lump-sum price paid by the franchisee for the privilege of being granted the franchise?

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Question 12

If a franchisor retains too much control over the day-to-day operations of a franchisee, it risks incurring what type of liability for the acts of the franchisee's employees?

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Question 13

In the case Kerl v. Dennis Rasmussen, Inc., what did the court state is the key consideration for imposing vicarious liability on a franchisor for the acts of a franchisee?

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Question 14

Under what legal theory are franchise relationships primarily governed?

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Question 15

What is the legal status of a provision in a franchise agreement that requires the franchisee to purchase all of its supplies exclusively from the franchisor?

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Question 16

In the case of Chic Miller's Chevrolet, Inc. v. General Motors Corp., GM was found to have 'good cause' to terminate the franchise because Chic Miller's failed to conduct customary sales and service operations for how many consecutive business days?

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Question 17

What principle do courts generally emphasize when determining whether a franchisor has acted properly in terminating a franchise agreement?

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Question 18

What percentage of sole proprietorships in the United States have revenues of less than 1 million dollars per year?

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Question 19

What is a major advantage of a sole proprietorship regarding its formation?

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Question 20

What is the legal standing of a franchisee in relation to the franchisor?

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Question 21

Which federal act, also known as the Automobile Dealers' Day in Court Act, protects automobile franchisees from unreasonable demands and bad faith terminations by the franchisor?

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Question 22

If a franchise agreement is silent on the issue of territorial rights, and the franchisor allows a competing franchise to be established nearby, what legal principle might a court invoke to find the franchisor's actions improper?

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Question 23

What is a Uniform Franchise Offering Circular (UFOC)?

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Question 24

More than two-thirds of all American businesses are of which business form?

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Question 25

If a franchisor's decision to terminate a franchise was made in the normal course of business operations and reasonable notice was given, a court will normally consider the termination to be what?

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Question 26

Which of the following is NOT listed as an advantage of a sole proprietorship?

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Question 27

In what circumstances does the law governing sales contracts, as expressed in Article 2 of the Uniform Commercial Code, apply to a franchise relationship?

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Question 28

In the case Chic Miller’s Chevrolet, Inc. v. General Motors Corp., the court found GM had good cause for termination after Miller’s failed to operate for seven consecutive business days. What was the dealer's stated reason for being closed?

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Question 29

In a distributorship franchise, what does the manufacturing concern (franchisor) typically license to the dealer (franchisee)?

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Question 30

What is one of the primary legal challenges associated with the quality control provisions in a franchise contract?

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Question 31

What is the primary reason for a franchisor's right to establish and enforce quality standards on a franchisee?

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Question 32

Which of the following must a sole proprietor typically file with the government to start the business?

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Question 33

In a franchise relationship, a franchisee typically pays the franchisor an initial fee for the license and ongoing payments that are usually a percentage of what?

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Question 34

If a franchise agreement provides for a short trial period, such as a year, what is the primary purpose of this provision?

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Question 35

When a franchise is terminated, what must the franchisee typically be given to conclude the business?

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Question 36

In the case *Garden City Boxing Club, Inc. v. Dominguez*, the court found that Antenas Enterprises improperly listed a restaurant as what type of account for billing purposes?

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Question 37

What is the primary factor courts consider when determining if a franchisor can be held vicariously liable for the tortious conduct of its franchisee?

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Question 38

Which of the following is an advantage of a sole proprietorship related to taxation?

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Question 39

In a chain-style business operation, the franchisee is often required to obtain materials and supplies exclusively from whom?

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Question 40

What is the typical consequence if a franchisee is induced to enter into a franchise contract by the franchisor’s fraudulent misrepresentation?

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Question 41

Which of the following would NOT be a typical 'for cause' reason for a franchisor to terminate a franchise agreement?

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Question 42

How is a sole proprietorship's ability to raise capital typically limited?

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Question 43

If a court determines that a franchisor's termination of a franchise was made in the normal course of business and with reasonable notice, what is the likely ruling?

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Question 44

What does a franchise contract typically specify regarding the business premises?

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Question 45

In the case *Kerl v. Dennis Rasmussen, Inc.*, the license agreement between Arby's and the franchisee DRI contained a provision that did what?

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Question 46

Which of the following is a legal right that a sole proprietor has, stemming from the flexibility of the business form?

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Question 47

What federal law prescribes the conditions under which a franchisor of service stations can terminate the franchise?

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Question 48

What do state deceptive trade practices acts typically prohibit in the context of franchising?

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Question 49

In the case *Chic Miller’s Chevrolet, Inc. v. General Motors Corp.*, how did GM demonstrate its good faith during the dispute over floor plan financing?

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Question 50

If a franchise agreement requires the franchisee to have a particular capital structure, this provision would be found in what section of the franchise contract?

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