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Exam 5: How to Form a Business

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Question 151

True/False

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It is correct to say that if a franchisor expects a 6% royalty fee on revenue, the franchisor earns 6 cents on each dollar of revenue the franchisee generates.

A) True
B) False

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Question 152

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In recent years, foreign firms were reluctant to merge with or acquire American corporations.

A) True
B) False

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Question 153

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One reason that a firm would choose to merge or acquire another company would be to gain market share.

Once a business is established, it's almost impossible to change from one form of business ownership to another.

Cory Raider is leading a group of stockholders who wants to take the Bigbux Corporation private. If Cory's group succeeds, Bigbux's stock will no longer be available to investors on the open market.

Marilyn paid a sizeable franchise fee to obtain a Fontmaster Printers franchise in Cleveland, Ohio. With the franchise fee behind her, she can look forward to using her creative talents to make her print shop different and more attractive than other Fontmaster shops in the Cleveland area.

Emma Pebble and Chase Stone formed a partnership in a landscape business. Under their arrangement. Emma actively manages the company and assumes unlimited liability for the firm's debts. Chase has invested several thousand dollars of his money with plans to share in the profits, but does not actively make management decisions, nor will he assume liability beyond his initial investment. Emma and Chase participate in a limited partnership.

According to the Legal Briefcase box, "Vermont wants to be the Home of Your New Virtual Company", a Vermont virtual LLC's profits are distributed to members according to their contribution of time, expertise, and money.

The three major forms of business ownership in the U.S. are sole proprietorships, partnerships, and corporations.

Public utilities are examples of quasi-public corporations.

Corporations represent 20 percent of all the businesses in the U.S. and earn 81 percent of the total U.S. business receipts.

Stockholders in a corporation normally exert a significant degree of control over the company's daily operations.

When two or more people legally agree to become co-owners of a business, the form of business is called a partnership.

A group of medical doctors are interested in incorporating their business. There is no advantage due to the costs involved.

A domestic corporation does business in the state in which it's chartered.

A general partner has unlimited liability for the debts of the partnership only if he or she personally approved the decisions that resulted in those debts.

Maria recently purchased 100 shares of stock in Idle Time Gaming, Inc. Maria is a(n) of this company.

With respect to taxes, the sole proprietorship:

Nick wants to start his own business. Nick should consider a sole proprietorship if he:

A franchise may be organized as a sole proprietorship, partnership, or corporation.