Business Chapter 4

A(n) ______ is where one company purchases the property and obligations of another.

Acquisition

Many brick and mortar franchisees are using ______ to expand their businesses online to lower costs and better meet the needs of their customers.

E-commerce. Technology. Websites.

True or false: Partnerships are less likely to survive than sole proprietorships.

False

A corporation is formally formed with:

articles of incorporation and bylaws

An advantage of the corporate form of business is that limited liability allows it to:

limit individual responsibility for losses

Don wanted to incorporate his business and liked the attributes of an S-corporation, however, he did not feel the eligibility requirements would work for his purposes. He is likely to choose to form a(n) _________ ______________company.

limited liability

When two firms join together to form one new company, it is called a(n)

merger

An LLC submits a written operating agreement, similar to a(n) ___________ agreement, describing how the company is to be operated.

partnership

In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is known as

unlimited liability

A merger that joins two companies involved in different but related levels of an industry is a(n) ______ merger.

vertical

A franchise owner will experience the coattail effect when:

A fellow franchisee does something that has an impact on growth and profitability.

Ed has decided to purchase and follow a business format by becoming a franchisee. The _______ _______ he will sign gives him the right to use the business name and sell the products of the firm.

Franchise agreement

When a soft drink company and a mineral water company merge and then are able to supply a variety of drinking products they have formed a(n) _______ merger.

Horizontal

An advantage of partnerships is a longer _______ rate than sole proprietorships, because they become more disciplined and the business's life is based on all the partners.

Survivor

Ending a partnership can be difficult because of problems deciding

The worth of a retiring partner's share. How to distribute assets. When a partner can retire.

A corporation is a legal ______ with authority to act and have liability separate from its owners.

entity

A state-chartered legal entity with authority to act and have liability separate from its owners is a

Corporation

Which of these are advantages of a limited liability companies?

Choice of taxation. Flexible ownership rules. Limited liability.

When producers, consumers, or workers with similar needs pool their resources for mutual gain, they start a(n):

Cooperative (co-op)

A major disadvantage of the corporate form deals with the tax situation called __________ taxation.

Double

What are some of the advantages of franchising?

Lower failure rate. Financial advice. Recognized name.

About 30 percent of franchises are owned by African Americans, Latinos, Asians, and Native Americans. Franchisors are becoming more focused on recruiting _______ franchisees.

Diverse or minority

What are the advantages of the LLC form of organization?

Flexible ownership rules. Limited liability. Choice of taxation.

An agreement that gives a business the right to use a business's name and sell a product or service in a given area is a(n):

Franchise

Financial advice and a nationally recognized name are both benefits of owning a(n)

Franchise

A merger of two firms in the same industry that allows the companies to diversify or expand their products is a(n):

Horizontal merger

The attributes of a corporation include that:

It is a legal entity. corporate liability is separate from owners. It is state chartered.

LLCs do have to submit articles of organization and an operating agreement, but do not have to:

Keep minutes File written resolutions Hold annual meetings

In general partnership, all partners share the responsibility for operating the business and assume _____ for the business's debts.

Liability

A ________ partnership has partners who do not share in operating the business.

Limited

Stockholders' liability for losses only up to the amount they invest is called _______.

Limited liability

The form of business ownership called _______ protects the person's personal assets from the debts of the business.

Limited liability

What are some of the advantages of a corporation?

Limited liability. Ability to raise more money for investment.

An advantage of starting an online franchise is that:

No upfront fee may be required. Online franchisees can compete in world markets. Franchisees pay only a set monthly fee.

Select those items considered fringe benefits that people working for a company are likely to receive, but a sole proprietor has to develop on his own:

A pension plan Paid sick or vacation time Paid health insurance

A partnership _______ can spell out the requirements of terminating a partnership.

Agreement

An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors:

Are not involved in daily operations.

A legal form of business with two or more owners is a(n):

Partnership

Termination of a partnership is difficult without a(n) ______ agreement.

Partnership

Unlimited liability as it relates to sole proprietorships is the risk of loss of _________ assets beyond the assets of the business.

Personal

Limited liability is considered an advantage of forming an LLC because:

Personal assets are protected.

Home-based franchises have many advantages, such as:

Relief from the stress of commuting. Low overhead expenses.

Gathering leads on a company website, selling products and keeping up to date on news via email, and chat rooms all serve as examples of using ________ to assist franchisees and customers.

Technology

Which of the following are true regarding the process of forming a corporation.

The bylaws of the corporation describe how the firm is to be operated. The articles of incorporation must be filed in the state in which the company will be incorporated.

Many franchises are expanding internationally because:

There are large new markets available.

One of the most notable advantages of an online franchise is

There is no brick-and-mortar real estate cost.

Many people do not like working for someone, so being your own _______ is an advantage of sole proprietorship.

Boss

A merger that joins firms in completely unrelated industries is a:

Conglomerate merger

A(n) __________ is a state-chartered entity that exists in the eyes of the law and controls risk to the owners of the firm.

Corporation

What are some of the disadvantages of a corporation?

Cost of forming a corporation. Double taxation.

In addition to the articles of incorporation, a corporation has ______ which describe how the firm is to be operated from both legal and managerial points of view.

bylaws

A(n) ________ is a state-chartered entity that exists in the eyes of the law and controls risk to the owners of the firm.

corporation

A partnership where all owners share in operating the business and in assuming unlimited liability for the business's debts is a:

general partnership

One of the most important advantages of the sole proprietor form of ownership is that a business owner:

finds it easier to start and end the business.

Franchisors often use technology to meet the needs of both their customers and their ______ because technology makes communication faster and more widespread.

franchisees

An S corporation has the liability protections of a corporation but is taxed:

like a partnership or sole proprietorship

Taryn and Eilysh have decided to form a partnership. Taryn will not have management responsibility, but will invest money in the business. Taryn will be considered a(n)

limited partners

Franchises are expanding internationally to access additional _______ that have new customers and to increase their profit potential.

markets