Deck 8: Legal Issues Relating To New Ventures: Protecting Your Reputation, Your Assets, And Your Ideas

Question 1

If you own a Burger King in Little Rock,Arkansas and Burger King Corporation decides to spend $2 million for advertising during Superbowl,you will be required to pay a fee for that advertising even if you don't approve of spending the money on the Superbowl advertising..

Answer 1

True

Question 2

When a corporation makes a profit,it must pay taxes on that amount. Then,when those profits are distributed to shareholders,each shareholder must again pay taxes on his or her individual amount. This process is called double taxation.

Answer 2

True

Question 3

Partnerships are a very popular way for people to own their own business without developing their own products and business model.

Answer 3

False

Question 4

Assume that you work for a certain business and sign a nondisclosure agreement. That means you cannot discuss secret information of your employer with others outside of the business.

Question 5

Franchises are not regulated by the government.

Question 6

A manager who owns a used car company sells a car to a person who is a minor. A contract is signed by the minor,the minor makes a down payment,and takes the car home. Later,the minor decides that he does not want the car and refuses to make any more payments. This contract is binding on the minor and he must make the payments.

Question 7

A purpose of co-branding's is to have a greater volume of sales in the same location.

Question 8

In a limited partnership,the general partner is the person who manages the business.

Question 9

Limited Partnerships...

A) Have high risks for the limited partners because they can lose double what they invested.
B) Have high risks for the general partners because the limited partners can divest at any time.
C) Allow limited partners to participate in the most important managerial decisions.
D) Allow the general partners to manage and the limited partners to invest.
E) None of the above is true about limited partnerships.

Question 10

Sole proprietorship refers to a business that is owned by a family.

Question 11

A sole proprietor is subject to unlimited personal liability.

Question 12

A person is entering into a contract on the Internet. Checking the "I accept" box that is presented makes the contract binding,even if the person has not officially signed a signature.

Question 13

Say that you started a company with another person and each of you signed a buyback clause. If you leave this company,anyone in your family can legally buy the share of the company that you own.

Question 14

A contract must include "consideration" in order to be legal.

Question 15

Which of the following is a not a true statement concerning sole proprietorships?

A) Sole Proprietorships are easy to start but almost impossible to terminate.
B) The entrepreneur is personally liable for all debts incurred by the business.
C) If the entrepreneur is no longer able to operate the business, it must be terminated unless someone else is willing to operate it.
D) Sole Proprietorships amount to about 75% of all the businesses in the United States.
E) All of the above are true.

Question 16

The franchisee has the right to have all questions answered by the franchisor before signing the contract. Among this information may be information on past lawsuits against the franchisor and initial franchise fees and other required payments.

Question 17

A limited partner invests in the business but is not involved in the management of it..

Question 18

A noncompete agreement is a contract that sets up a special type of franchise..

Question 19

A limited liability partnership (LLP)pays taxes as does a corporation.

Question 20

The Toyota Company provides a trademarked name,the manufactured cars,and supplies some advertising for a Toyota dealership but it does not provide the building and lot nor methods of actually operating the dealership. This refers to a type of franchising called business format franchising.

Question 21

Which managers do the managing in a limited partnership?

A) general managers.
B) master managers.
C) limited managers.
D) joint venture managers.
E) unlimited general partners.

Question 22

A customer asks an entrepreneur to sponsor an upcoming community event and the entrepreneur agrees to do it with no fee,but changes his mind right before the deadline. By which basic element of a contract agreement is the entrepreneur not obligated to uphold his part of the deal?

A) Capacity
B) Agreement
C) Exchange
D) Legality
E) Consideration

Question 23

Which of the following is (are)required to register a corporation?

A) The corporation's name and location.
B) The names and addresses of the officers and directors.
C) The fee must be paid in full.
D) Only the things specified in choices a and b are required.
E) All of the above are required.

Question 24

Assume that you own a business with a friend and you both signed an agreement that says if one of you should leave the company,the other person has the legal right to purchase the share of the company owned by the person leaving. This is known as a

A) buyback clause.
B) nondisclosure clause.
C) noncompete clause.
D) unlimited personal liability clause.
E) uniform partnership clause.

Question 25

If a grocery store owner and a 15 year-old boy make an agreement,this contract will not be valid because of which contract requirement?

A) Legality
B) Contentment
C) Consideration
D) Capacity
E) Agreement

Question 26

Unlimited Personal Liability refers to,or applies to...

A) All sole proprietorships.
B) Both partners in a partnership.
C) The personal liability for all debts incurred by the business.
D) All of the above.
E) None of the above.

Question 27

Chester High School is expected to have a Pizza Hut opening in its cafeteria by the next school year. This is an example of a franchisor...

A) acquiring good community relationships.
B) trying to show school spirit.
C) opening in a non-traditional location.
D) fulfilling its legal obligations.
E) all of the above.

Question 28

Which form of business ownership has limited owner's liability,easy formation,and two or more owners?

A) Sole Proprietorship.
B) Partnership.
C) C. Corporation.
D) S. Corporation.
E) Limited Liability Company.

Question 29

Janet Green was unsure of opening a Crowne Plaza Hotel as a franchise in Aurora,IL,because,in the past year,the town has grown immensely and she was afraid that competing franchisees would build hotels close to hers and that would saturate the market in a few years and reduce her business. However,the Crowne Plaza Corporation has assured her that no additional competing hotels will built within 20 miles of her location. This guarantee by a franchisor is known as

A) Competition Royalty.
B) Territorial Protection.
C) Territorial Guarantee.
D) Competition Law of 1979.
E) None of the above.

Question 30

Which of the following is an example of an industry in which there are franchises?

A) Convenience Stores.
B) Furniture .
C) Hardware.
D) Car Dealerships.
E) All of the above.

Question 31

Howard Johnson Hotels purchases approximately 100 pillows a day,making its annual purchase of pillows very large. Having such a large annual purchase,allows Howard Johnson Hotels to negotiate a low price per pillow. This is an example of Howard Johnson Hotels using its __________ to succeed.

A) Standardized Products and Services.
B) Buying Power.
C) Financial Assistance.
D) Bargaining Power.
E) None of the above.

Question 32

Which of the following is most likely a professional corporation?

A) Boeing Corporation.
B) The University of Minnesota.
C) Southwest Airlines.
D) Johnson & Smith, Cardiac Surgeons.
E) New York City Government.

Question 33

The most simple form of business ownership is...

A) limited partnerships.
B) limited liability partnerships.
C) sole proprietorship.
D) S corporation.
E) joint venture.

Question 34

Related to the limited liability of a corporation,which of the following has been happening in recent years?

A) Courts have strongly enforced the limited liability of all corporations.
B) When a small corporation does not have sufficient money to pay a legal claim against it, the small corporation must become an S corporation.
C) If a small corporation does not have sufficient money to pay a legal judgment against it, courts have been holding the owners responsible to pay the judgment, especially when the judgment involves environmental or pension-related matters.
D) Courts have been deciding that a corporation from one state does not have limited liability when operating in another state.
E) Courts have been holding that joint ventures do not have limited liability.

Question 35

A person is planning on opening a Fantastic Sams Hair Salon and is scheduled to sign the contract in ten days. Under which rule does the franchisor have to disclose information such as previous bankruptcies and law suits?

A) Trade Regulation
B) Federal Regulation
C) Disclosure Act
D) Legality Procedure
E) None of the above

Question 36

Which of the following statements is not true concerning a corporation:

A) A corporation always has limited liability; the main advantage of a corporation.
B) Owners of the corporation and the company itself may be sued if business practices harm the environment.
C) Some are subject to double taxation.
D) Professional Corporations are subject to legal actions filed against them as individuals.
E) Corporations are legal entities apart from their owners that may engage in business, make contracts, own property, pay taxes, and sue and are sued by others.

Question 37

Assume that you work for a company that manufactures shoes. When hired,your signed a noncompete agreement that relates to when,and if,you leave the company. This agreement means that

A) you may not discuss trade secrets of the company with anyone outside of the company.
B) you will not be fired from the company.
C) if you leave the company, you may not go to work for a company that produces shoes.
D) if you leave the company, you may not go to work for a company that operates in the same geographical area.
E) you are working for a sole proprietorship.

Question 38

Which of the following does not require a written contract?

A) Paying someone else's debt.
B) Real Estate Transactions.
C) Contracts that involve the sale of goods with a $500 value or more.
D) Contracts that require longer than one year to perform.
E) All of the above require a written contract.

Question 39

Which of the following does not pertain to limited partnerships?

A) Limited Liability Partnerships.
B) General Partners.
C) Limited Partners.
D) Limited Partnership Agreement.
E) All of the above pertain to limited partnerships.

Question 40

Which of the following is not necessarily a benefit of becoming a franchisee?

A) National Advertising.
B) Training and Support.
C) Standardized Products and Services.
D) Buying Power.
E) None of the above.

Question 41

In which of the following forms of business does the business pay federal income taxes?

A) Limited liability partnerships (LLP).
B) C corporations.
C) S corporations.
D) Both C corporations and S corporations pay federal income taxes.
E) Limited liability company (LLC).

Question 42

Explain "consideration" as a basic element of a contract.

Question 43

Describe an S Corporation. Examine the requirements and the consequences if such requirements are not met.

Question 44

The Coca-Cola name,the way it appears and the way it is spelled,legally belongs to the Coca-Cola Company and is associated with its products. It is called a

A) copyright.
B) trade secret.
C) trademark.
D) plant patent.
E) complementary asset.

Question 45

Which of the following does not exist?

A) Prior art.
B) International patent.
C) Sub Chapter S Corporation.
D) C Corporation.
E) Limited liability partnership.

Question 46

A person wants to apply for a patent and is searching existing patents to see if there already is one like the new invention for which a patent is sought. The person is searching

A) prior art.
B) claims patents.
C) reverse engineering practices.
D) invent around statutes.
E) inventory.

Question 47

Not all companies that introduce new products or inventions gain profits from being first. Which of the following things will influence whether or not a company being first will be profitable?

A) The company has a strong patent.
B) The presence or absence of a dominant design in the industry.
C) The presence of complementary assets in marketing and distribution.
D) All of the above (a, b, and c).
E) Only a and c

Question 48

Under what conditions might a first mover strategy help protect an entrepreneur's intellectual property? Explain how these conditions might favor the first mover.

Question 49

Assume that one party to a contract does not complete her end of the agreement. The other person sues and is awarded money that is about equal to the damages sustained by the breach of contract. This money is known as

A) punitive damages.
B) consideration.
C) compensatory damages.
D) breach damages.
E) standardized damages.

Question 50

According to the Uniform Partnership Act,each partner has which of the following rights?

A) To share in the management of the business.
B) To share in the profits of the business.
C) To have access to the books.
D) All three choices (a, b, and c) are correct.
E) Only choices a and b are correct.

Question 51

Patents for new processes,machines,devices,etc.are known as

A) plant patents.
B) utility patents.
C) design patents.
D) claims patents.
E) first mover patents.

Question 52

Compare and contrast a sole proprietorship and a franchise.

Question 53

A company buys the product of another company and takes it apart to see how it was designed and assembled. This is known as

A) illegal purchasing syndrome.
B) trademark infringement.
C) plant patents.
D) reverse engineering.
E) inventory checking.

Question 54

Define complementary assets and explain when and how they might help an entrepreneur protect intellectual property.

Question 55

A legal right granted by a national government that allows an inventor to prevent others from using the same invention is known as a/an

A) prior art.
B) one click invention.
C) invent around.
D) patent.
E) first move strategy.