Fact Pattern 36-1 (Questions 1-2 apply) Jack's Burgers and Beers Inc. offers entrepreneurs the opportunity to operate a franchise under the Jack's Burgers and Beers trade name as a member of a select group of dealers that engage in retail juice sales.

1. Refer to Fact Pattern 36-1. To potential investors, Jack's Burgers and Beers must provide a. actual earnings figures. b. hypothetical earnings figures. c. projected earnings figures. d. none of the choices.

2. Refer to Fact Pattern 36-1. Jack's Burgers and Beers makes earnings claims to potential investors. For those claims, the franchisor a. can have a hypothetical basis. b. must have a reasonable basis. c. must have an actual basis. d. can have any or no basis.

3. Franklin Copiers Corporation provides its prospective franchisees with projected earnings figures based on actual data. Franklin Copiers must also disclose a. the number and percentage of franchisees that achieved the figures. b. hypothetical examples of potential earnings. c. an answer to the entrepreneur's question, "How much will I make?" d. none of the choices.

4. Gerald buys from Halbert Catering Supplies the exclusive right to use the Halbert trademark and sell and lease Halbert Catering brand products in a certain area. Their franchise agreement requires Gerald to pay certain administrative expenses. Their agreement may also require Gerald to pay a percentage of the franchisor's a. advertising costs. b. personal expenses. c. retirement income. d. none of the choices.

5. Beacon Boating Company and Cayacks Inc., share officers, directors, employees, property, and equipment. In reliance on Beacon's reputation, Derrick Inc. contracts to perform services for Cayacks, but the firm does not pay. In terms of liability to Derrick, Inc, a court is most likely to treat Beacon and Cayack as a. a pass-through entity. b. a natural person. c. a tax-paying entity. d. a partnership by estoppel.

6. Salisbury Savories is a general partnership that sells confectionaries. Salisbury has ten partners. Jack and Ann each have a 25 percent interest in the partnership. All the other members have a 10 percent interest. To pass a management decision a. a majority of the partners must agree to the decision. b. both Jack and Ann must agree to the decision. c. Jack and Ann must agree to the decision. d. 30 percent of the partners must agree to the decision.

7. Queenie and Ralph are partners in Sail Boats and more, which rents and sells boats and boat accessories. Queenie manages the business. Unless the partnership agreement states otherwise, Queenie is a. entitled to compensation in proportion to her effect on the business. b. entitled to compensation in proportion to her effort. c. entitled to compensation in proportion to her capital contribution. d. not entitled to compensation.

8. Cal, a partner in Carbon Copiers, applies for a loan with Englewood Bank allegedly on the firm's behalf but without the authorization of the other partners. Englewood knows that Cal is not authorized to take out the loan. If Cal defaults on the loan, liability for its unpaid amount will be imposed on a. Cal and Carbon Copiers, jointly. b. Cal only. c. Carbon Copiers only. d. Englewood only.

9. Omar is a partner in Peattry Enterprises. In the majority of states, with respect to any partnership obligations that Omar does not participate in, know about, or ratify, Omar would be liable for a. none of the obligations. b. all of the obligations, jointly and severally. c. all of the obligations, jointly but not severally. d. only the contractual obligations.