Exam 6: Business Formation: Choosing the Form that Fits

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

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Question 1

Correct Answer:

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The advantage of franchising to the franchisor is that franchisors often find that franchisees-as profit-oriented owners-are more motivated than salaried managers to do whatever it takes to maximize the success of their outlets.
The disadvantage of franchising to the franchisor is that franchisors often find that dealing with a large number of semi-independent franchisees can be complex and challenging.
The advantage of franchising to the franchisee is that operating a franchise can be considerably less risky than starting a business from scratch. That's because franchises offer access to a proven business system and product.
The disadvantage of franchising to the franchisee is that participating in a franchise can be costly-franchisees usually pay an initial franchise fee as well as ongoing royalties; in addition, they can be assessed additional fees to cover costs such as national advertising campaigns.

In a carve-out, a firm:

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Question 2

Correct Answer:

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Which of the following is a disadvantage of a sole proprietorship?

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Question 3

Correct Answer:

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A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

(Multiple Choice)

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Question 4

A key reason most sole proprietorships remain relatively small is that:

(Multiple Choice)

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Question 5

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

(Multiple Choice)

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Question 6

The nature of work and the work schedule in the animation department of a movie production company differ from that of other departments of the company. Hence, the company decides to branch this department out into a new company by selling the stock to outside investors. In this scenario, the company is using a strategy called a(n):

(Multiple Choice)

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Question 7

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

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Question 8

Which of the following is a difference between a C corporation and an S corporation?

(Multiple Choice)

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Question 9

Cella, a clothing manufacturer, has licensed Crux Corp. to market and sell its products. This is an example of a _____.

(Multiple Choice)

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Question 10

Wayne has a great idea for a new business which he believes will help him make a lot of money. He is eager to get started, so he wants to form his business with a minimum of hassle, expense, and red tape. He also wants to be his own boss and have complete control over the company. Wayne's goals suggest that he would seriously consider operating his business as a sole proprietorship.

(True/False)

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Question 11

A Franchise Disclosure Document:

(Multiple Choice)

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Question 12

A corporation is a form of business ownership in which:

(Multiple Choice)

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Question 13

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

(Essay)

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Question 14

The owner of a sole proprietorship must share any after-tax profits with the company's shareholders.

(True/False)

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Question 15

A disadvantage of a general partnership is that:

(Multiple Choice)

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Question 16

A corporation is a voluntary agreement under which two or more people act as co-owners of a business for profit.

(True/False)

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Question 17

Franchising is seldom used to move into foreign markets.

(True/False)

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Question 18

Which of the following is a characteristic of limited liability companies (LLCs)?

(Multiple Choice)

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Question 19

Which of the following statements is true of formation of general partnerships?

(Multiple Choice)

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Question 20

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

In a carve-out, a firm:

Which of the following is a disadvantage of a sole proprietorship?

A _____ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.

A key reason most sole proprietorships remain relatively small is that:

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

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

Which of the following is a difference between a C corporation and an S corporation?

Cella, a clothing manufacturer, has licensed Crux Corp. to market and sell its products. This is an example of a _____.

A Franchise Disclosure Document:

A corporation is a form of business ownership in which:

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

The owner of a sole proprietorship must share any after-tax profits with the company's shareholders.

A disadvantage of a general partnership is that:

A corporation is a voluntary agreement under which two or more people act as co-owners of a business for profit.

Franchising is seldom used to move into foreign markets.

Which of the following is a characteristic of limited liability companies (LLCs)?

Which of the following statements is true of formation of general partnerships?

Business Now: Change Is the Only Constant

Economics: The Framework for Business

The World Marketplace: Business Without Borders

Business Ethics and Social Responsibility: Doing Well by Doing Good

Business Communication: Creating and Delivering Messages that Matter

Small Business and Entrepreneurship: Economic Rocket Fuel

Accounting: Decision Making by the Numbers

Finance: Acquiring and Using Funds to Maximize Value

Financial Markets: Allocating Financial Resources

Marketing: Building Profitable Customer Connections

Product and Promotion: Creating and Communicating Value

Distribution and Pricing: Right Product, Right Person, Right Place, Right Price

Management, Motivation and Leadership: Bringing Business to Life

Human Resources Management: Building a Top Quality Workforce

Managing Information and Technology: Finding New Ways to Learn and Link

Operations Management: Putting It All Together

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