Ch. 5

Which are considered disadvantages of incorporating?

1) Extensive paperwork 2) Double Taxation 3) Initial Cost

What are some of the advantages of a corporation?

1) Limited liability 2) Ability to raise more money for investment

What is true regarding the process of forming a corporation.

1) The bylaws of the corporation describe how the firm is to be operated 2)The articles of incorporation must be filed in the state in which the company will be incorporated

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

1) file written resolutions 2) keep minutes 3) hold annual meetings

Advantages of starting an online franchise are:

1) online franchisees can compete in world markets 2) franchisees pay only a set monthly fee 3) no upfront fee may be required

Home-based franchises have many advantages, such as:

1) relief from the stress of commuting 2) low overhead expenses

What are some of the disadvantages of a corporation?

A) Double taxation B) Cost of forming a corporation

What is true about the advantages and disadvantages of being a franchise owner?

A) While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch B) Having a nationally recognized name for your business in a franchise can help with marketing and awareness

Ending a partnership can be difficult because of problems deciding:

A) when a partner can retire B) the worth of a retiring partner's share C) how to distribute assets

One company's purchase of the property and obligations of another company is a(n)

Acquisition or buyout

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

False [[ Reason: According to research. partnerships are four times as likely to succeed for a longer time.]]

A company similar to an S corporation but without the special eligibility requirements is an:

LLC

_________ owned businesses are growing at more than the national rate.

Minority

A unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership is called a(n)

S corporation

What is true regarding the process of forming a corporation?

The bylaws of the corporation describe how the firm is to be operated

(T/F?): While you are still your own boss as a franchise owner, your territory or selling boundaries may be regulated by the franchisor.

True [[ Reason: You have a certain amount of personal control as a franchise owner, but there are still many rules and regulations you are required to follow. ]]

(T/F?): While you are still your own boss as a franchise owner, your territory or selling boundaries may be regulated by the franchisor.

True [[Reason: You have a certain amount of personal control as a franchise owner, but there are still many rules and regulations you are required to follow.]]

A franchise owner will experience the coattail effect when...

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

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

agreement

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships is:

an S corporation

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 corporation is formally formed with:

articles of incorporation and bylaws

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

boss, employer or manager

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 business owned and controlled through pooled resources by the people who use it is a(n):

cooperative

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

cooperative

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

entity

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

entity

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

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

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

franchisees (employees, suppliers, investors, or stakeholders)

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) _______________ partnership.

general

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

general partnership

Relief from the stress of commuting, extra time for family activities, and low overhead expenses are all advantages of _________________ franchises

home based

Stockholders are ________________ from the managers and employees of the firm because they are not actively involved in the operations of the firm.

independent, separate(d)

LLC's are considered to have operational flexibility because while they must submit articles of organization,they are not required to:

keep minutes or hold annual meetings

A form of business ownership that provides limited liability, as in a corporation, but is taxed like a partnership is a(n):

limited liability company

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

markets

About 20 percent of franchises are owned by African Americans, Latinos, Asians, and Native Americans. Franchisors are becoming more focused on recruiting _________ franchisees

minority

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

partnership

An S corporation has the liability protections of a corporation but is taxed like what?

partnership or sole proprietorship

A business that is owned and managed by one person is a(n) ___________ __________________.

sole proprietorship

Studies have indicated that partnerships are four times more likely to succeed than:

sole proprietorships

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

Because of the poor publicity at a fellow franchise location, you notice that sales at your location have decreased. The impact of the poor publicity on your company is referred to as ______ _________ ___________.

the coattail effect

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.

If your company debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called...

unlimited liability

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

The result of two firms joining to form one is called a(n):

merger

The attributes of a corporation include that:

A) it is state chartered B) it is a legal entity