BLAW Quiz 13

A cooperative cannot be incorporated.

False

A sole proprietor pays personal and business income taxes on the business's profits.

False

The day-to-day operation of the franchise business normally is under the control of the franchisor.​

False

Shop n' Pay Convenience Stores, Inc., is a franchisor. Tonya operates a Shop n' Pay franchise. Ulysses is one of Tonya's employees. As a franchisor, if Shop n' Pay controls the day-to-day operations of the business to a significant degree, it may be liable for tortious acts by

Shop n' Pay, Tonya, or Ulysses

A court will pierce the corporate veil of a corporation that is formed to accomplish an illegitimate objective.

True

A limited liability company can be held liable for any loss or injury caused by the wrongful acts or omissions of its members.

True

A straight majority vote of the shares represented at a shareholders' meeting is usually required to pass resolutions.

True

Generally, each state limits the liability of partners in a limited liability partnership in some way.

True

If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level.

True

Shareholders can elect and remove the directors of the corporation.

True

When the corporation is harmed by the actions of a third party, the directors can bring a lawsuit in the name of the corporation against that party.

True

Holly is a director of International Gourmet Spices, Inc. As a director, with respect to the corporation, Holly is

a fiduciary

Dollars & Sense, Inc., is incorporated in the state of New Jersey and is doing business in the state of New York. In New York, Dollars & Sense is properly referred to as

a foreign corporation

Custom Auto Body & Detailing, LLC, is a limited liability company. Its members include Dennis and Estelle. Like other LLCs with more than one member, unless indicated otherwise, the firm will automatically be taxed as

a partnership

The incorporation of the town of Halfway, Oregon, is approved by the state. Halfway is

a public corporation

Graham buys from Hook, Line & Sinker Corporation the exclusive right to sell Hook, Line & Sinker fishing gear in a certain area. Their franchise agreement requires Graham to pay certain administrative expenses. Their agreement may also require Graham to pay a percentage of the franchisor's

advertising costs

Hudson and Ilsa want to market a new line of kayaks and related gear under the brand name Journeys as a corporation—Journeys Inc. To avoid income taxes at the corporate level, they should form

an S corporation

Qatar Global Investments is a foreign entity—a firm owned and operated by investors in a foreign country. With respect to a limited liability company in the United States, Qatar Global can

become a member

Restful Inn Motel Corporation wants to terminate its franchise arrangement with Steve's Cabins. Their contract does not provide for notice of termination or set a time for winding up the business. This means that to wind up, Steve's

has a reasonable time, with notice

Ben incorporates his app products business as Clickology, Inc. Under most state corporation statutes, Clickology can have

perpetual existence