Business Chapter 5

Which of following are true about the advantages and disadvantages of being a franchise owner:

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

Advantages of starting an online franchise are:

Advantages of starting an online franchise are:

Because of the poor publicity at a fellow franchise location you notice the sales at your location of decrease the impact of the poor publicity on your company is referred

Coattail effect

What are some of the disadvantages of a corporation?

Double taxation Cost of forming a corporation

If producers, consumers, or workers with similar needs pool their resources for mutual gain, they have created a franchise

False

Partnerships are less likely to survive than sole proprietorships.

False

One of the most notable advantages of an online franchise is

One of the most notable advantages of an online franchise is

Rank the order in which members of a corporation are chosen in order to separate ownership from management. Start at the top of the managerial hierarchy.

Owners/stockholders elect board of directorsBoard of Directors hire officers of the corporationOfficers hire managers of the corporationManagers hire employees

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

Sole Proprietorship

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

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

Many franchise are expanding internationally because

There are large new markets available

While your are still your own boss as a franchise owner, your territory or selling boundaries may be regulated by the franchisor.

True

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

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

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

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

cooperative

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

corporation

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

diverse

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

double

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

employees

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

Many minority business owners prefer a(n) _______ because it offers business connections and support.

franchise

The right to use a specific business' name and sell its products or services in a given territory is a(n) agreement.

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

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

general partnership

The attributes of a conventional corporation include that:

it is state chartered it is a legal entity corporate liability is separate from owners

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

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

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

liability

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

like a partnership or sole proprietorship

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

markets

The result of two firms (usually corporations) combining to form one company is called a

merger

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

merger

A key advantage of a home-based franchise is low _____________ costs, which can be ongoing. These are the costs associated with rent, utilities, and other fixed costs.

overhead

A key advantage of a home-based franchise is low costs, which can be ongoing. These are the costs associated with rent, utilities, and other fixed costs.

overhead

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

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

Home-based franchises have many advantages, such as:

relief from the stress of commuting low overhead expenses

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

separate

If you start and manage a landscaping business on your own, you have likely started a:

sole proprietorship

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

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

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

websites e-commerce technology