Deck 3: Hospitality Business Structures

Question 1

Two advantages of owning a franchise as a franchisee include ____.

A) Perceived quality of the brand and payment of high royalty fees.
B) Greater ability to secure financing and mandatory disclosures by the franchisor.
C) Known brand and lack of control over operating standards.
D) Legal assistance by franchisor and available on-site training from franchisor.

Answer 1

B

Question 2

Which of the following organizational structures is least desirable from a liability perspective?

A) Limited partnership
B) General partnership
C) "S" corporation
D) Limited liability company

Answer 2

B

Question 3

The earliest known franchisor was _______.

A) McDonald's Corporation
B) Hershey's
C) Holiday Inn
D) Singer Sewing Machine Company

Answer 3

D

Question 4

The applicable law that governs a business entity is determined by where that entity, say a corporation, has filed its creation documents.

Question 5

Organizations operating a business under an assumed name or a trade name _______.

A) Need only make sure all tax filings have both names.
B) Should file a certificate disclosing the ownership structure of the organization.
C) Must include the phrase "Incorporated" in the name.
D) Don't need to worry about infringement suits.

Question 6

Owner-operator is a type of operating structure in which the owners of a business are directly responsible for its day-to-day operation. Also known, in some cases, as an "independent."

Question 7

Under the principal/agent relationship theory, an agent _____.

A) Must agree to all terms in the contract.
B) Will have a fiduciary responsibility to the principal.
C) Cannot work on any other projects for other principals.
D) Is only obligated to perform in accordance with the exact terms contained in the written agreement.

Question 8

A sole proprietorship is the safest legal entity for a new business owner to create as it includes limited liability from negligence claims.

Question 9

The legal entity which is taxed twice, once when revenue is earned and then again when the profits are distributed to the owners is known as ____.

A) "C" Corporation
B) Limited Liability Company
C) Limited Partnership
D) Joint Venture

Question 10

The least complex of all organizational structures is _______.

A) Joint Venture
B) Sole Proprietorship
C) "S" Corporation
D) Limited Liability Company

Question 11

Limited liability companies are formed under federal and not state law.

Question 12

In a limited partnership, the limited partner has unlimited liability.

Question 13

A hybrid hotel consists of condos, typically full-time residences, as well as traditional hotel rooms.

Question 14

A type of business entity that offers liability protection to all owners and is exempt from taxation on its profits is?

A) Sole proprietorship
B) "C" corporation
C) "S" corporation
D) Limited partnership

Question 15

The conduct of individual employees has a direct effect on the liability of a business.

Question 16

The owners of a LLC are called members.

Question 17

The fees charged to a hotel owner to manage a hotel by a hotel management company commonly ranges between 1% - 5% of the hotel's monthly gross revenue.

Question 18

The type of relationship in hospitality which is known as the employer-employee relationship is also called _________.

A) The Master-Servant Relationship
B) The Agent-Principal Relationship
C) The Employer/Independent Contractor
D) The Agent-Agency Relationship

Question 19

The owners of a corporation are called _____.

A) Investors
B) Members
C) Lenders
D) Shareholders

Question 20

REITs must pay corporate income tax and state income tax.