California Real Estate Practice Exam

An agent obtains a listing to sell a registered franchise from the owner. The sale will include both building and land. Before he begins servicing the listing, the agent must:

1. file an application and receive a permit from the DRE

2. file an application for exemption of registration of the offering with the corporations commissioner

3. obtain a "cooperative" sales agreement from a stock broker

4. none of the above

The correct answer is: file an application and receive a permit from the DRE

The requirement for the agent to file an application and receive a permit from the Department of Real Estate (DRE) is essential when dealing with the sale of a registered franchise, especially when the transaction encompasses both the building and the land. In California, franchise sales are regulated to protect consumers and ensure that necessary disclosures are made. The DRE oversees such transactions to ensure compliance with real estate laws and the specific regulations concerning franchises. By obtaining a permit, the agent demonstrates that they are operating within legal parameters and that they have met all regulatory requirements necessary to facilitate the sale. This step ensures that the sale of the franchise adheres to the state’s legal standards, providing reassurance both to the owner of the franchise and potential buyers regarding the legitimacy and compliance of the transaction. The other options pertain to different regulatory processes that may not be directly relevant to the initial steps the agent must take in this particular scenario.