Question 1

Parker and Oscar sign a partnership agreement to do business as "Parker's Plumbing" without specifying a duration.This partnership is terminable

Accepted Answer

Since the partnership agreement does not specify a duration, the partnership is at-will, meaning either partner can terminate the partnership at any time without breaching the agreement.

Question 2

Ryder and Sergei are partners in Timberline Gear,which sells mountain- and rock-climbing equipment.Ryder manages the business.Unless the partnership agreement states otherwise,Ryder is

Accepted Answer

The answer of Ryder and Sergei are partners in Timberline...

Question 3

Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide rods and reels in a certain area.Their franchise agreement requires Gage to pay certain administrative expenses.Their agreement may also require Gage to pay a percentage of the franchisor's

Accepted Answer

The franchise agreement may require Gage to pay a percentage of the franchisor's advertising costs as part of the franchise fees. This is a common practice in franchise agreements as it allows the franchisor to promote the brand more effectively while sharing the cost of advertising with its franchisees. The other options, such as personal expenses or retirement income, are not typically included in franchise agreements as franchisees are expected to operate their businesses independently.

Question 4

Hollister and Gladys do business as partners in Frothy Confections.For federal income tax purposes,Frothy Confections would be treated as

Accepted Answer

As a partnership, Frothy Confections would be treated as a pass-through entity. This means that the partnership itself does not pay federal income taxes, but rather the profits and losses of the partnership are passed through to the individual partners who report them on their personal tax returns.

Question 5

Kelly,the owner of Llama Farms,a sole proprietorship,wants to obtain additional business capital but to maintain control.This can best be accomplished by

Accepted Answer

By borrowing funds, Kelly can obtain additional capital without giving up control of the business. Bringing in partners would result in sharing control and profits, and issuing stock would result in selling ownership shares to investors. Selling the business would obviously result in Kelly losing control.

Question 6

Tawny buys a Super Grill franchise.Super Grill requires that its franchisees buy its products for every phase of their operations.Because Tawny wishes to buy less expensive products,she challenges the requirement.Her best argument is probably that the requirement violates

Accepted Answer

The answer of Tawny buys a Super Grill franchise.Super Grill...

Question 7

Ben,who runs a livestock breeding business,owes the Circle C Ranch $40,000.Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid.Because of this agreement,the Circle C is

Accepted Answer

The answer of Ben,who runs a livestock breeding business,owes the...

Question 8

Dingo Bangles Company wants to present information in "disclosure documents" via the Internet to prospective franchisees.Among other legal requirements with which Dingo must comply,prospective franchisees must

Accepted Answer

Providing the ability for prospective franchisees to download or save all electronic documents is a requirement for compliance with legal regulations. The other choices are not necessary or appropriate requirements for disclosure documents via the Internet.

Question 9

Trina and Uri do business as Value Gems.In acting on the firm's behalf in a deal with World Diamond Exchange,Trina recklessly exceeds what Value Gems can afford to pay,causing damage to the firm.Trina is

Accepted Answer

Trina has breached her duty of care by acting recklessly and causing harm to the firm. As a partner in the business, Trina owes a duty of care to the firm, which means she must act in the best interests of the business and exercise reasonable care, skill, and diligence in performing her duties. By recklessly exceeding what the firm can afford to pay, Trina has breached this duty and is liable for any resulting harm. B and C are not applicable in this scenario. D is incorrect as Trina is liable for her actions.

Question 10

Mead,Nero,and Olen do business as Pipe & Plumbing Services,a partnership.After Mead's relationship to the firm ends,Nero and Olen agree to discontinue the business.This is

Accepted Answer

Dissolution refers to the termination of a partnership or a company. In this case, since Nero and Olen agree to discontinue the business after Mead's departure, it can be considered dissolution. Dissociation refers to the voluntary or involuntary withdrawal of a partner from a partnership. Gross negligence and simple misconduct are not relevant to this scenario.

Question 11

Cody is a partner in Derivative Investment Service (DIS).Cody can inspect

Accepted Answer

As a partner in DIS, Cody has a right to inspect all of the firm's books and records. This is a common right granted to partners in a partnership agreement.

Question 12

Vim+Vigor Fitness Corporation uses a Web site to provide downloadable information to prospective franchises.This online information is the equivalent of an offer that must comply with

Accepted Answer

The Federal Trade Commission's Franchise Rule requires that franchisors provide a Franchise Disclosure Document (FDD) to prospective franchises, which contains various disclosures about the business opportunity. The online information provided by Vim+Vigor Fitness Corporation would be considered part of the FDD and must therefore comply with the FTC's Franchise Rule.

Question 13

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, which outlines the terms and conditions of the franchise agreement between the franchisor and the franchisee. The franchisor provides the franchisee with a contract that specifies the expectations, obligations, and restrictions of the franchisee.

Question 14

Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant.Pronto will likely charge Omar

Accepted Answer

Pronto Tacos LLC will likely charge Omar an initial fee or lump sum price for the franchise license. This is a common practice in franchising and allows the franchisor to generate revenue and recoup their costs for providing training, marketing, and other support to the franchisee.

Question 15

Leigh wants to go into the business of construction contracting.Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be

Accepted Answer

Sole proprietorship offers greater organizational flexibility as the owner has complete control over business decisions and operations. Limited liability, perpetual existence, and ease of transferring the business to other family members are benefits offered by other business entities like LLCs and corporations.

Question 16

Mello Coffee Shops,Inc. ,sells a franchise to Noah's Arch,a café.Mello is

Accepted Answer

Mello Coffee Shops, Inc. is selling a franchise to Noah's Arch, which means Mello Coffee Shops, Inc. is the franchisor.

Question 17

Hometown Realtors,Inc. ,sells a franchise to Group Sales Company.Group Sales is

Accepted Answer

Hometown Realtors, Inc. sold a franchise to Group Sales Company, which means that Group Sales Company is the franchisee who has bought the rights to operate under the Hometown Realtors, Inc. brand and business model.

Question 18

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 19

Nicole is interested in buying a franchise from Oz Oysters Inc.For Nicole to make an informed decision concerning this purchase,Oz must disclose in writing or online

Accepted Answer

Oz Oysters Inc. must disclose material facts such as the basis of projected earnings figures to enable Nicole to make an informed decision. This information can help Nicole evaluate the potential profitability of purchasing the franchise. Simply providing general estimates of costs and sales without providing the basis for them would not be sufficient. It is also important for Oz Oysters to disclose start-up requirements and renewal conditions, but these are not the only relevant factors that need to be disclosed. Disclosing no information at all would not meet the legal requirements for franchise disclosure.

Question 20

Cluckee Chick'n Corporation provides its prospective franchisees with projected earnings figures based on actual data.Cluckee Chick'n must also disclose

Accepted Answer

Cluckee Chick'n must disclose the number and percentage of franchisees that achieved the projected earnings figures as this information will help the prospective franchisees in making an informed decision about investing in the franchise. Providing hypothetical examples or a definitive answer to the question, "how much will I make?" may lead to misleading or inaccurate information.

Quiz 17: Sole Proprietorships,franchises, Partnerships

Parker and Oscar sign a partnership agreement to do business as "Parker's Plumbing" without specifying a duration.This partnership is terminable

Ryder and Sergei are partners in Timberline Gear,which sells mountain- and rock-climbing equipment.Ryder manages the business.Unless the partnership agreement states otherwise,Ryder is

Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide rods and reels in a certain area.Their franchise agreement requires Gage to pay certain administrative expenses.Their agreement may also require Gage to pay a percentage of the franchisor's

Hollister and Gladys do business as partners in Frothy Confections.For federal income tax purposes,Frothy Confections would be treated as

Kelly,the owner of Llama Farms,a sole proprietorship,wants to obtain additional business capital but to maintain control.This can best be accomplished by

Tawny buys a Super Grill franchise.Super Grill requires that its franchisees buy its products for every phase of their operations.Because Tawny wishes to buy less expensive products,she challenges the requirement.Her best argument is probably that the requirement violates

Ben,who runs a livestock breeding business,owes the Circle C Ranch $40,000.Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid.Because of this agreement,the Circle C is

Dingo Bangles Company wants to present information in "disclosure documents" via the Internet to prospective franchisees.Among other legal requirements with which Dingo must comply,prospective franchisees must

Trina and Uri do business as Value Gems.In acting on the firm's behalf in a deal with World Diamond Exchange,Trina recklessly exceeds what Value Gems can afford to pay,causing damage to the firm.Trina is

Mead,Nero,and Olen do business as Pipe & Plumbing Services,a partnership.After Mead's relationship to the firm ends,Nero and Olen agree to discontinue the business.This is

Cody is a partner in Derivative Investment Service (DIS) .Cody can inspect

Vim+Vigor Fitness Corporation uses a Web site to provide downloadable information to prospective franchises.This online information is the equivalent of an offer that must comply with

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

Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant.Pronto will likely charge Omar

Leigh wants to go into the business of construction contracting.Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be

Mello Coffee Shops,Inc. ,sells a franchise to Noah's Arch,a café.Mello is

Hometown Realtors,Inc. ,sells a franchise to Group Sales Company.Group Sales is

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

Nicole is interested in buying a franchise from Oz Oysters Inc.For Nicole to make an informed decision concerning this purchase,Oz must disclose in writing or online

Cluckee Chick'n Corporation provides its prospective franchisees with projected earnings figures based on actual data.Cluckee Chick'n must also disclose

Quiz 17: Sole Proprietorships,franchises, Partnerships

Parker and Oscar sign a partnership agreement to do business as "Parker's Plumbing" without specifying a duration.This partnership is terminable

Ryder and Sergei are partners in Timberline Gear,which sells mountain- and rock-climbing equipment.Ryder manages the business.Unless the partnership agreement states otherwise,Ryder is

Gage buys from Fishing Guide Corporation the exclusive right to sell Fishing Guide rods and reels in a certain area.Their franchise agreement requires Gage to pay certain administrative expenses.Their agreement may also require Gage to pay a percentage of the franchisor's

Hollister and Gladys do business as partners in Frothy Confections.For federal income tax purposes,Frothy Confections would be treated as

Kelly,the owner of Llama Farms,a sole proprietorship,wants to obtain additional business capital but to maintain control.This can best be accomplished by

Tawny buys a Super Grill franchise.Super Grill requires that its franchisees buy its products for every phase of their operations.Because Tawny wishes to buy less expensive products,she challenges the requirement.Her best argument is probably that the requirement violates

Ben,who runs a livestock breeding business,owes the Circle C Ranch $40,000.Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid.Because of this agreement,the Circle C is

Dingo Bangles Company wants to present information in "disclosure documents" via the Internet to prospective franchisees.Among other legal requirements with which Dingo must comply,prospective franchisees must

Trina and Uri do business as Value Gems.In acting on the firm's behalf in a deal with World Diamond Exchange,Trina recklessly exceeds what Value Gems can afford to pay,causing damage to the firm.Trina is

Mead,Nero,and Olen do business as Pipe & Plumbing Services,a partnership.After Mead's relationship to the firm ends,Nero and Olen agree to discontinue the business.This is

Cody is a partner in Derivative Investment Service (DIS) .Cody can inspect

Vim+Vigor Fitness Corporation uses a Web site to provide downloadable information to prospective franchises.This online information is the equivalent of an offer that must comply with

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

Pronto Tacos LLC grants a franchise to Omar to open and operate a Pronto Tacos restaurant.Pronto will likely charge Omar

Leigh wants to go into the business of construction contracting.Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be

Mello Coffee Shops,Inc. ,sells a franchise to Noah's Arch,a café.Mello is

Hometown Realtors,Inc. ,sells a franchise to Group Sales Company.Group Sales is

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

Nicole is interested in buying a franchise from Oz Oysters Inc.For Nicole to make an informed decision concerning this purchase,Oz must disclose in writing or online

Cluckee Chick'n Corporation provides its prospective franchisees with projected earnings figures based on actual data.Cluckee Chick'n must also disclose

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