Question 1

A _________ is a contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties.

Accepted Answer

A franchise agreement is a legally binding document that establishes the terms and conditions of the franchise relationship between the franchisor and franchisee. It outlines the obligations and responsibilities of both parties, including the use of the franchisor's trademarks, payment of fees, and confidentiality agreements. The Franchise Disclosure Document (FDD) is a separate document that provides detailed information about the franchisor and the franchise opportunity, while a business format agreement and dealership agreement are different types of contracts used in other business arrangements.

Question 2

The basic rules governing how a corporation is organized and how it conducts its business are known as _________.

Accepted Answer

Corporate bylaws are the basic rules that govern how a corporation is organized and how it conducts its business. The articles of incorporation are the legal document that creates the corporation, and the certificates of organization are typically used for limited liability companies. Prospectuses are documents used for publicly traded companies to disclose information to potential investors.

Question 3

Identify and explain two advantages and two disadvantages of sole proprietorships.

Accepted Answer

The answer of Identify and explain two advantages and two...

Question 4

Mention the advantages and limitations of nonprofit (or not-for-profit)corporations.

Accepted Answer

The answer of Mention the advantages and limitations of nonprofit...

Question 5

Sole proprietors have _________ for the debts of their companies.

Accepted Answer

Sole proprietors have unlimited liability for the debts of their company, meaning that their personal assets can be used to satisfy any outstanding debts or financial obligations of the business. This is the main disadvantage of operating as a sole proprietorship.

Question 6

As an artificial person, a _________ can legally engage in virtually any business activity a natural person can pursue, including owning property, entering into binding contracts, and initiating legal actions.

Accepted Answer

A corporation is an artificial person that can engage in almost any business activity that a natural person can pursue, including owning assets, entering into contracts, and filing lawsuits.

Question 7

Describe the basic features of limited partnerships and limited liability partnerships.

Accepted Answer

The answer of Describe the basic features of limited partnerships...

Question 8

A general partnership avoids the problem of _________ endemic to corporations.

Accepted Answer

General partnerships avoid the problem of double taxation because profits are passed directly to the partners and taxed as personal income, unlike corporations where profits can be taxed at both the corporate and personal levels.

Question 9

List and describe any two forms of business ownership.

Accepted Answer

The answer of List and describe any two forms of...

Question 10

Describe at least one advantage and one disadvantage of franchising for the franchisor, and at least one advantage and disadvantage for the franchisee.

Accepted Answer

The answer of Describe at least one advantage and one...

Quiz 6: Business Formation: Choosing the Form that Fits