Riley Is Interested in Buying a Franchise from Soft Shoe

question 39

Multiple Choice

Riley is interested in buying a franchise from Soft Shoe Corporation. Soft Shoe must disclose material facts that Riley needs to make an informed decision concerning this purchase, according to

• A) no law.
• B) the federal service-station franchise termination law.
• C) the Federal Trade Commission's Franchise Rule.
• D) the Illinois Franchise Disclosure Act.

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, leading to a decrease in the per-unit cost as output increases.

Market Dominance

Market dominance refers to the situation where a company has a significant share of the total sales of a particular product or service, giving it substantial control over the market.

Herfindahl Index

The Herfindahl Index is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them, calculated by summing the squares of each firm's market share.

Clayton Act

A U.S. antitrust law enacted in 1914 to promote competition and prevent monopolies by prohibiting certain actions that could lead to anticompetitive practices.