Exam 5: How to Form a Business

According to the Uniform Partnership Act, the three key elements of any general partnership are (1) common ownership, (2) shared profits and losses, and (3) the right to participate in managing the operations of the business.

The financial advantage to the parent company (the franchisor) in a franchise arrangement is the upfront franchise fee and the collection of royalties if franchisees are successful.

In a limited partnership, the general partners should encourage the limited partners to take a more active role in the operations of the business. After all, the limited partner has comparable liability in the business, even though he/she may not be a partner for as long a period of time as the general partners.

The most popular businesses for franchising are restaurants.

Katie and her siblings created a design company called Homeward Bound LLP. Although key business functions are centralized, each sibling is a licensed architect that designs, builds, and installs residential and commercial buildings for his/her own clients. Unfortunately, a recent design of Katie's that was ultimately created and installed for one of their clients resulted in water damage to the basement of the client's new home. The limited liability partnership

According to the Uniform Partnership Act, the three key elements of any general partnership are

One of the major advantages for the franchisee is instant business name recognition and important management assistance from the franchisor.

Declan plans to open up three Pizza Pals franchises in the greater Phoenix area. He tells you that he plans to negotiate with the franchisor to get rid of the giant Preston the Pizza that sits on the roof of all Pizza Pal restaurants. Declan is likely to learn that

Which of the following is an advantage of franchises?

Although sole proprietors do not pay any special taxes, as the owner of the business you are also an employee of the business, which requires you to

A type of partnership called a ________ acts much like a corporation and is traded on stock exchanges, but it is taxed like a partnership with profits passing through to the owners and taxed as the owner's personal income.

Compared to the C corporation, the limited liability company is an attractive form of business ownership because

A good reason why partners should spell out the details of their partnership arrangements in writing is

Compared to sole proprietorships, an advantage of partnerships is their ability to obtain more financial resources.

Stock options are the right to purchase shares of the corporation for a fixed price.

Which of the following is normally considered a disadvantage of the corporate form of business?

What is a C corporation? What are the major advantages and disadvantages of this form of business ownership?

After a fruitful first five years, Serenity Stables, LLC (a retirement ranch for racehorses), thinks it may be able to attract donations from animal advocate groups and even the federal government if it becomes a nonprofit corporation. As its business advisor, you explain that as a nonprofit corporation, the owner(s) may earn a salary but the business should not seek after-tax profits.

At one time there were many farm cooperatives, but more recently other forms of business ownership have replaced them.

Unlike partnerships, if sole proprietorships find themselves in bankruptcy, they don't need to worry about a court requiring them to sell off personal assets to pay for the debts of the firm.