Which of the Following Is True About the FTC Franchise

question 3

Multiple Choice

Which of the following is true about the FTC franchise rule with respect to earnings projections made by a franchisor in materials provided to prospective franchisees?

• A) Because they are inherently misleading,financial projections cannot be made.
• B) Any earnings projections must be based on the actual results of an existing franchisee.
• C) Any earnings projections cannot be based on an actual franchisee and must be based on a hypothetical franchisee and be relevant to the franchisee receiving the information.
• D) The franchisor can provide projections based on either actual or hypothetical franchisees,but if projections are provided,certain additional disclosures must be made.
• E) The franchisor can provide projections based on either actual or hypothetical franchisees,but can be liable for damages to the franchisee if the results are not reasonably achievable.

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Definitions:

Cognitive Components

Elements that make up the mental processes involved in gaining knowledge and comprehension, including thinking, knowing, problem-solving, and decision-making.

Emotional

Pertaining to feelings or affective states that can influence thoughts, behaviors, and physiological responses.

Emotional Regulation

The ability to manage and respond to an emotional experience with a range of emotions in a socially acceptable manner.

Indiscriminate Attachment

A phase in early human development where infants show no preference for specific caregivers and seek comfort and attention from anyone.