Question 1

Leo buys an exclusive territory in which he is authorized to set up a plant to make Midwest Dairy,Inc.,products.After receiving the formula,Leo begins making Nice Ice-brand ice cream and other Midwest products.This is

Accepted Answer

The scenario describes Leo buying an exclusive territory to set up a plant to make Midwest Dairy, Inc. products, which suggests that he has a manufacturing franchise.

Question 2

Tumble Gymnastics & Karate,Inc.,grants a franchise to Stefan to operate a Tumble gym.Tumble may require Stefan to pay the franchisor a percentage of the business's

Accepted Answer

The most common way for a franchise to earn revenue from its franchisees is by receiving a percentage of the business's annual sales or volume. This is known as a royalty fee and is a standard feature of most franchise agreements. Option B and C are not common ways for a franchisor to earn revenue from its franchisees, and option D is not correct because a franchisor typically receives some form of payment or fee from its franchisees.

Question 3

Cecilia's Day Spa,LLC,is a member-managed limited liability company.If the law in Cecilia's state is like the law in most states,unless the members have agreed otherwise,voting rights are apportioned according to

Accepted Answer

In most states, unless the members have agreed otherwise, voting rights in a member-managed LLC are apportioned according to the capital contributions each member has made to the company.

Question 4

A franchise agreement between Software² Company and Games³,Inc.,is silent on a time for termination of the franchise.Software² may

Accepted Answer

The answer of A franchise agreement between Software² Company and...

Question 5

Felipe is a member of Great States Trucking LLC.Felipe's relationship to Great States ends,but the firm continues to do business.This is

Accepted Answer

Dissociation is the legal process by which a partner or member of a company withdraws from the business while the business itself continues to operate. In this scenario, Felipe is dissociating from Great States Trucking LLC but the firm is continuing to do business.

Question 6

Sally and Tom decide to go into business,selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm.The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties,but the agreement says nothing about the management of the firm or a division of profits.Without Sally's knowledge,Tom tells United Computer Products,Inc.,that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy.In the first year,e-Buy makes a profit of $50,000.What are the partners' rights with respect to the management of the firm Is the partnership bound to the contract with United Do the partners split the first year's profits If so,how much is each entitled to

Accepted Answer

The answer of Sally and Tom decide to go into...

Question 7

Ewa,the owner of Face-2-Face Enterprises,is a sole proprietor.What are the chief characteristics,advantages,and disadvantages of this form of business organization Ewa wants to obtain additional capital to expand Face-2-Face,but she does not want to lose control of the firm.As a sole proprietor,what is her best option to attain these goals

Accepted Answer

The answer of Ewa,the owner of Face-2-Face Enterprises,is a sole...

Question 8

CPA Accounting,LLC,is a limited liability company.If the law in CPA's state is like the law in most states,unless the members have agreed otherwise,participants in the firm's management will be considered to include

Accepted Answer

In most states, all members of a limited liability company are considered to be participants in the firm's management, unless they have agreed otherwise. This means that all members have equal say in the decision-making process and management of the company.

Question 9

Real Events Promotion Corporation licenses Stadium Souvenirs,Inc.,to sell Real Events caps,sweatshirts,and similar goods.This is

Accepted Answer

The scenario describes a licensing agreement where one company (Real Events Promotion Corporation) is granting another company (Stadium Souvenirs, Inc.) the right to sell their products under their brand name. This is a classic example of a franchise agreement.

Question 10

Echo enters into an agreement with Deep Pan Pies,Inc.,to operate a franchise in Centre City.Later,Deep grants franchises to others within the city.Echo files a suit to close them.If the court rules in Echo's favor it will most likely be on the ground that

Accepted Answer

The implied covenant of good faith and fair dealing is a legal principle that is commonly included in contracts, including franchise agreements. This principle requires parties to act in good faith and deal fairly with one another, and it can be breached if one party acts in a way that undermines the other party's rights or benefits under the contract. In this case, Echo may argue that Deep's decision to grant franchises to others within the same territory as Echo's franchise breaches the implied covenant of good faith and fair dealing, as it undermines Echo's exclusive right to operate a franchise in that area. If the court agrees, it may rule in Echo's favor and order the closure of the other franchises.

Question 11

Sylvester buys a franchise from Resistance Athletic Shoes Inc.This relationship,like all other franchise relationships,is governed by

Accepted Answer

Franchise relationships are governed by contract law as they involve a contractual agreement between the franchisor and the franchisee. The franchise agreement outlines the rights and obligations of each party and the terms of the franchise relationship.

Question 12

Pizza & Cookies,LLC,is a limited liability company.Among its members,a dispute arises that the operating agreement and the state LLC statute do not cover.The dispute is governed by

Accepted Answer

The answer of Pizza & Cookies,LLC,is a limited liability company.Among...

Quiz 14: Small Business Organizations