Own it Your Own Way (Part B) Test Review

Wendy’s sells the right to operate its restaurants to individuals who meet the company’s criteria. The arrangement between Wendy’s and these individuals is an example of

• a partnership agreement.

• multi-level marketing.

• licensing.

• franchising.

Jake wanted to run his own business but was unsure that he had adequate business skills to be successful. Which type of business would give Jake the help he needs?

• Private corporation

• Sole proprietorship

• Business-format franchise

• Product trade-name franchise

Which of the following is a characteristic of a product trade-name franchise:

• It is not open to the public.

• The franchisee can choose the name of the business.

• The franchisee has unlimited liability

• It is owned by shareholders.

Jane is the owner of a pizza shop associated with a national chain of pizza restaurants. She established her business in a regional supermarket. The pizza shop is referred to as a

• host franchise

• strategic alliance.

• master licensee.

• piggyback franchise.

Olivia runs a home-based business that distributes high-quality, handmade baskets. She sells the products and earns commissions on the baskets sold by four other basket representatives. This is an example of

• product licensing.

• product trade-name franchising.

• multi-level marketing.

• strategic partnering.

Illegally run organizations that emphasize the collection of high fees from potential product distributors are often referred to as

• pyramid schemes.

• pressure-cooker tactics.

• marketing rackets.

• deceptive advertising gimmicks.

ABC Specialty Wear is the only company that has written permission to use a national football team’s logo on its sportswear. This is an example of a

• product trade-name contract.

• sole proprietorship.

• licensing agreement.

• limited joint-venture contract.

Which of the following statements is true regarding joint ventures:

• Joint-venture arrangements are usually short-term relationships

• Joint ventures are used only when it is necessary to raise a lot of capital

• Large corporations are the only business structures that can benefit from joint ventures.

• An independent attorney should always be consulted before signing a joint-venture agreement.