Business Law ch. 36

Someone who initiates and assumes the financial risk of a new enterprise.
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A legal entity formed in compliance with the statutory requirements of its state of incorporation, owned by shareholders whose liability is limited to their investment in the corporation, and managed by (i) a board of directors elected by the shareholders and (ii) officers employed by the board of directors.
A relationship where the franchisor transmits to the franchisee essential ingredients or the specifications to make a particular product, which the franchisee will then market at the wholesale or retail level in accordance with the franchisor's standards.manufacturing or processing plantBecause a franchise relationship is primarily a contractual relationship, _______ _________ _________ governs most aspects of the franchise relationship. In addition, federal statutes govern particular types of franchises or aspects of franchising. For example:state contract lawact that protects automobile dealership franchisees whose franchisors impose unreasonable demands and then terminate the franchise because of the dealer's failure to satisfy them.The Automobile Dealers' Franchise Actact that prescribes the grounds and conditions under which a franchisor may terminate or decline to renew a gas station's franchise.The Petroleum Marketing Practices ActMore generally, the Federal Trade Commission's Franchise Rule requires franchisors to...disclose material facts that a prospective franchisee needs in order to make an informed decision whether to purchase a franchise.Many states have franchise statutes and regulations that tend to mimic ...federal franchise statutes and regulations.The franchisee typically pays...an initial fee or a lump-sum price for the franchise license, separate and apart from the cost of any equipment and products the franchisee purchases from the franchisor.In most cases, the franchisee will also pay the franchisor a percentage of ___________ _________ and, quite often, will contribute to advertising and administrative costs of the franchisor.annual salesThe agreement should specify whether the franchisee must ________ or ________ its business premises.lease or purchasewho determines the location of the franchisee's territory?the franchisor typicallyThe franchise agreement may require the franchisee to use a particular organizational _______ and _______ _______form and capital structureA franchisor may establish and enforce certain quality standards in order to protect its...reputationA franchisor may _________ the price at which its franchisees will sell its productsuggesta franchisor mandating price may run afoul of applicable _________ lawsanti trustmost franchise agreements specify what?durationWhen can the franchisor and the franchisee agree to extend that duration?if they can agree on the terms of renewalwhen can a franchisor terminate a franchisee before the end of the stated duration?only if its "for cause" (ex. death, bankruptcy, insolvency of the franchisee, breach of franchise agreement) AND only with prior noticeIf the franchise agreement does not set a minimum period for notice prior to termination, then the franchisor must give the franchisee...reasonable notice of its intent to terminate the franchiseeMany franchise agreements grant a franchisee the opportunity to cure an ordinary curable __________ within a reasonable time after the franchisor's noticebreachBecause the franchisee makes a substantial investment to use, but not own, the franchisor's trademark, trade name, etc., both statutory and case law emphasize the franchisor's duty to act in...good faith when terminating a franchisee