blaw ch21
Which of the following is not a type of partnership?
A sole proprietorship
According to most states, in which of the following situations does a partnership by estoppel exist?
A third party is aware of a misrepresentation of partnership and consents to the misrepresentation.
Which of the following is an accurate statement about the formation of partnerships?
A written agreement that creates a partnership is called the articles of partnership.
Identify a recognized disadvantage to the franchisor of starting a franchise.
Can become liable for the franchise if it exerts too much control
Which of the following is not a recognized advantage of a corporation?
Corporate income taxed once
Which of the following is a recognized disadvantage of a corporation?
Corporate income taxed twice
Identify a recognized disadvantage of a sole proprietorship.
Funding is limited to personal funds and loans.
Which of the following is a difference between partnerships and joint ventures in the eyes of the law?
If one of the members of a joint venture dies, the joint venture is not automatically terminated.
Which of the following is not a key reason for the rapid acceptance of limited liability companies (LLCs)?
LLCs require profits and losses to be allocated in proportion to ownership interests.
Which of the following is a recognized advantage to the franchisor of starting a franchise?
Low risk in starting the franchise
Which of the following is a recognized disadvantage to the franchisee of starting a franchise?
Must meet the franchisor's standards or risk losing the franchise
Which of the following is not a recognized advantage to the franchisee of starting a franchise?
Required compliance with the franchisor's exacting standards
Specialized forms of business organization include all but which of the following?
S partnerships
Which of the following has a franchise rule requiring franchisors to present prospective franchisees with the material facts necessary for the franchisees to make an informed decision about entering a franchise relationship?
The Federal Trade Commission (FTC)
Which of the following is a recognized disadvantage of a sole proprietorship?
The proprietor has personal liability for all losses.
A ______ is a person who can expect to benefit from a business trust.
beneficiary
A(n) ______ is a business organization governed by a group of trustees.
business trust
In a ______-style business operation, the franchise operates under the franchisor's business name and is required to follow the franchisor's standards and methods of business operation.
chain
McDonald's and Burger King are examples of ______-style business operations.
chain
A franchise agreement is a ______ whereby the ______ grants permission to the ______ to use the grantor's name, trademark, or copyright in the operation of a business and the associated sale of goods in return for payment.
contract; franchisor; franchisee
A ______ is an organization formed by individuals to market products.
cooperative
Participants in a joint venture usually share profits and losses of the joint venture ______.
equally
When a person goes into McDonald's to eat lunch, the person is likely eating at a ______.
franchise
A ______ partnership consists of an agreement that the partners will divide the profits and management responsibilities and share unlimited personal liability for the partnership's debts.
general
A limited partnership (LP) is an agreement between at least one ______ and at least one ______.
general partner; limited partner
In a(n) ______, all the partners assume liability for any partner's professional malpractice to the extent of the partnership's assets.
limited liability partnership (LLP)
A(n) ______ is an agreement between at least one general partner and at least one limited partner.
limited partnership (LP)
Once a partnership is ______, the partners begin the process of winding up.
liquidated
In a member-managed limited liability company (LLC), all members participate in management, with decisions in the ordinary course of business activities made by a ______ vote.
majority
In a(n) ______-managed limited liability company (LLC), the members select a group of managers to manage the affairs of the company.
manager
Deciding what form of business to create is one of the ______ important decisions a business makes.
most
Limited liability companies (LLCs) typically want to do business in states other than the state in which they are formed, and they usually need to register in every additional state in which they want to operate, a process typically referred to as ______.
qualification
Corporate ______ elect a board of directors, which is responsible for managing a business.
shareholders
Investor-owners of a corporation are called ______.
shareholders
A ______ proprietorship is a business in which one person is in control of the management and profits.
sole
A(n) ______ is the single person at the head of a sole proprietorship
sole proprietor
If a person started doing business without thinking about the form of the business, he or she would be a(n) ______.
sole proprietor
If a person decides to go into business on his or her own, he or she is creating a ______.
sole proprietorship
A(n) ______ is a person who operates a trust for beneficiaries in a business trust.
trustee
The ______ of a partnership is the activity of completing unfinished partnership business, collecting partnership assets, taking inventory, and collecting and paying debts.
winding up
Which of the following is not a duty of partners to one another?
The beneficiary duty to the other partners
The articles of partnership usually include all but which of the following information?
The classes of stock issued by the partnership
Which of the following is not a consequence of a corporation's status as a separate legal entity?
The corporation cannot be held liable for its debts.
Which of the following is the first stage in the termination of a partnership?
The dissolution stage
Which of the following is typically not included in the articles of partnership?
The educational credentials and work experience of each partner
Which of the following is not a recognized advantage to the franchisee of starting a franchise?
The franchisee's lack of creative control over the business
Identify a difference between partnerships and joint ventures in the eyes of the law.
The members of a joint venture have less authority than general partners.
Which of the following events does not result in the dissolution of a limited liability company (LLC) under the Uniform Limited Liability Company Act (ULLCA)?
The passage of 30 consecutive days during which the company has no members
Which of the following is not a recognized advantage of a sole proprietorship?
The proprietor is immune from personal liability for all losses.
Which of the following is the second stage in the termination of a partnership?
The winding-up stage
Which of the following is not typically included in a limited liability company's (LLC's) articles of organization?
The work experience of the shareholders
Which of the following is an accurate statement about S corporations?
They are always formed under federal law.
Which of the following is not a recognized advantage of a partnership?
Financial capital can be raised through stock issuance.
Which of the following is not a recognized advantage of a corporation?
Formalities required in establishing the corporation
Identify a recognized disadvantage of a corporation.
Formalities required in maintaining the corporation
Which of the following is not a recognized advantage of a sole proprietorship?
Funding is unlimited as stock can be issued to address capital needs.
Which of the following is a recognized disadvantage to the franchisor of starting a franchise?
Has little control over the franchise
Identify a recognized disadvantage to the franchisee of starting a franchise.
Has little to no creative control over the business
Which of the following is not typically included in a limited liability company's (LLC's) operating agreement?
How the integrated franchise agreement is to be terminated
Which of the following is an accurate statement about limited liability partnerships (LLPs)?
In an LLP, the partners' liability for any partner's malpractice is limited to the extent of the partnership's assets.
Parties not named in a partnership agreement can be considered partners through a partnership by estoppel. Identify a true statement about such a party who is considered a partner.
In many states, the party can be held liable for the costs of the damages to the customer.
Identify a recognized disadvantage of a partnership.
In most cases, each partner has personal liability for the business losses of another partner.
Identify a recognized advantage to the franchisor of starting a franchise.
Increased income from the franchise
Which of the following is not a recognized advantage of a partnership?
Individual partners have immunity from personal liability for all business losses.
Which of the following is not a key reason for the rapid acceptance of limited liability companies (LLCs)?
LLCs do not allow their members to avoid the double taxation that owners of a corporation pay.
A(n) ______ corporation is a business organization formed under federal tax law that is considered a corporation yet is taxed like a partnership as long as it follows certain regulations.
S
Which of the following applies to a franchise relationship?
The Uniform Commercial Code (UCC)
______ defines the ______ of a partnership as the change in the relation of the partners caused by any partner's ceasing to be associated with the carrying on of the business.
The Uniform Partnership Act (UPA); dissolution
Which of the following is an incorrect statement about a franchise agreement?
The agreement requires the franchisor to establish the price at which the franchisee must sell the goods.
Which of the following is true about the termination of franchises?
When determining whether a franchise was wrongfully terminated, the courts usually rely heavily on the written franchise agreement.
Which state had the first LLC formed in it in 1977?
Wyoming
A ______ is a partnership agreement in which a firm's members hold transferable shares, whereas all the goods of the firm are held in the names of the partners.
joint stock company
A ______ is a relationship between two or more persons or corporations created for a specific business undertaking.
joint venture
A(n) ______ is a(n) ______ form of business organization that many people see as combining the most advantageous features of partnerships and corporations.
limited liability company (LLC); unincorporated
In a(n) ______, the franchisor provides the franchisee with a formula or necessary ingredient to manufacture a product. The franchisee then manufactures the product and sells it according to the franchisor's standards.
manufacturing arrangement
Categories of franchises include chain-style business operations, distributorships, and ______.
manufacturing arrangements
In a(n) ______-managed limited liability company (LLC), all members participate in management.
member
When members form a limited liability company (LLC), they typically draft a(n) ______ agreement, which is the foundational contract among the entity's owners.
operating
A limited liability company (LLC) is formed by filing articles of ______ in the state in which members want to establish their LLC.
organization
A written agreement that creates a partnership is called the articles of ______.
partnership
Syndicates are usually considered a type of joint venture; thus, they are almost always governed by ______ law.
partnership
Parties not named in a partnership agreement can be considered partners through a(n) ______.
partnership by estoppel
A limited liability company (LLC) combines the tax advantages and management flexibility of a Blank______ with the limited liability of a(n) Blank______.
partnership; corporation
Specialized forms of business organization include all but which of the following?
partnerships
The ______ of a limited liability company (LLC) simply entails filing a certificate of authority or a similar document and getting a business license in each additional state in which the business plans to operate.
qualification
An investment group that comes together for the explicit purpose of financing a specific large project is called a ______.
syndicate
According to __________, a partnership is a voluntary association between two or more persons who co-own a business for profit.
the Uniform Partnership Act (UPA)
A franchisee is a person who sells goods or services under a ______ or ______ based on a franchise agreement.
trade name; trademark
A franchisor is the owner of a ______ or ______ in a franchise.
trade name; trademark
An individual who operates a trust for beneficiaries in a business trust is known as a ______.
trustee
A business trust is a business organization governed by a group of ______, who operate the trust for the ______.
trustees; beneficiaries
A partnership is a ______ association between two or more persons who co-own a business for ______.
voluntary; profit
An S corporation cannot have more than ______ shareholders.
100
Which of the following is not a specialized form of business organization?
A corporate proprietorship
Which of the following is perhaps the most dominant form of business organization?
A corporation
According to most states, identify a situation in which a partnership by estoppel exists.
A nonpartner has represented himself or herself as a partner, and a third party reasonably relies on this information to his or her detriment.
Which of the following is not a recognized reason for the rightful dissolution of a partnership?
A partner finds it easy to perform partnership responsibilities.
Which of the following is not a recognized reason for the rightful dissolution of a partnership?
A partner is added in accordance with the partnership agreement.
Which of the following is not a consequence or result of a corporation's status as a separate legal entity?
Corporate shareholders can be held personally liable for the debts of the corporation.
Which of the following is a recognized disadvantage of a partnership?
Each partner has personal liability for all business losses.
A written business trust agreement establishes the duties and powers of the trustees and the interests of the ______.
beneficiaries
The Automobile Dealers' Franchise Act of 1965 prohibits car dealership franchisors from terminating franchise relationships ______.
in bad faith
A ______ is a business organization in which members usually pool their resources to gain some kind of competitive advantage in the market.
cooperative
A ______ is a legal business entity formed by issuing stock to investors.
corporation
A _________ is a business formation that becomes a separate legal entity.
corporation
A joint stock company is a mixture of a(n) ______ and a ______.
corporation; partnership
An S corporation is a business organization formed under federal tax law that is considered a ______ yet is taxed like a ______.
corporation; partnership
Under the Uniform Limited Liability Company Act (ULLCA) and most state limited liability company (LLC) statutes, a member's voluntary withdrawal from the LLC, referred to as Blank______, Blank______ the LLC.
dissociation; does not terminate
The ______ of a partnership is considered complete when any partner stops fulfilling the role of a partner to the business by choice or default.
dissolution
When a general partner dies, the partnership generally:
dissolves
A car dealership is an example of a ______.
distributorship
A ______ is a franchise in which the franchisor manufactures a product and licenses a dealer to sell the product in a(n) ______ territory.
distributorship; exclusive
The Petroleum Marketing Practices Act of 1979 outlines the reasons for which a franchisor may terminate a(n) ______ franchise.
gas station
In a manager-managed limited liability company (LLC), the members select a group of managers to manage the affairs of the company. The managers may be selected from ______.
either the members or nonmembers
Partners must, in good faith, work for the benefit of their partnership and refrain from taking any kind of action that would undermine the partnership. This is known as the partners' ______.
fiduciary duty
A ______ is a business arrangement between an owner of a trade name or trademark and a person who sells goods or services under the trade name or trademark.
franchise
According to the Federal Trade Commission's (FTC's) ______, franchisors must present prospective franchisees with the material facts necessary for the franchisees to make an informed decision about entering into a franchise relationship.
franchise rule
A ______ is a person who sells goods or services under a trade name or trademark based on a franchise agreement.
franchisee
A ______ is the owner of a trade name or trademark in a franchise.
franchisor
A franchise is a contractual relationship between the ______ and the ______.
franchisor; franchisee
