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Exam 26: Sole Proprietorships and Private Franchises

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Question 31

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Riki, the owner of Simply Sushi, is a sole proprietor. What are the chief characteristics, advantages, and disadvantages of this form of business organization? Riki 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?​

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A sole proprietorship is the simplest fo...

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Question 32

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A franchisee can operate as an independent businessperson but still obtain the advantages of a national organization.

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Question 33

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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

Fong contracts to buy a franchise from Genuine Asian Sushi House Company. In this contract, as in most franchise contracts, the determination of the territory to be served is made by

Any suit against the business or its employees does not lead to unlimited personal liability for the owner of a sole proprietorship.

As a general rule, the validity of a provision permitting the franchisor to establish and enforce certain quality standards is questionable.

Graham buys from Hook, Line & Sinker Corporation the exclusive right to sell Hook, Line & Sinker fishing gear in a certain area. Their franchise agreement requires Graham to pay certain administrative expenses. Their agreement may also require Graham to pay a percentage of the franchisor's​

A sole proprietorship offers less flexibility than does a partnership or a corporation.

In choosing a form of business organization for a new enterprise, important factors include the ability to raise capital.

Bob is the sole proprietor of ClamBooks, an electronic book subscription service. As a sole proprietor, on the business's profits, Bob pays​

A franchisor can suggest retail prices for the goods that a franchisee sells but cannot mandate them.

A franchisee ordinarily does not pay a fee for a franchise license (the privilege of being granted a franchise).

A sole proprietorship lacks continuity on the death of the proprietor.

Esperanza is interested in buying a franchise from Fire Mountain Gemstones, Inc. Fire Mountain must disclose material facts that Esperanza needs to make an informed decision concerning this purchase, according to​

Oberon buys a Pro Club Health & Fitness, Inc., franchise, which the franchisor later terminates. In determining whether the termination was proper, a court will generally

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​

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

Any lawsuit against the business does not lead to unlimited personal liability for the owner of a sole proprietorship.

If a franchisor's decision to terminate a franchise is made in the normal course of business and reasonable notice is given, it is less likely that the termination will be considered wrongful.

Corbin organized, and owns and operates, Corbin’s Deep Sea Fishing Tours in the simplest form of business organization. This is