Exam 5: Business Formation: Choosing the Form That Fits

A vertical merger is a combination of firms at different stages in the production of a good or service.

Successful franchisors are particularly vigilant in avoiding situations where the behaviour of an incompetent or irresponsible franchisee harms the reputation of the franchisor and other franchisees. What do we call this effect?

The formation of a corporation requires filing a special form with the provincial or federal government.

Why are cooperatives formed?

Limited partnerships and limited liability partnerships are just two names for exactly the same type of business organization.

Laryssa Wu is a bright, hard-working, and responsible young woman who has always wanted to own a business. However, she realizes that she lacks training and experience in some areas of running a business and doesn't have confidence in her ability to start a new company from scratch. She also is nervous about the amount of risk involved in business ownership. These concerns suggest that Laryssa might be interested in becoming a franchisee in a business format franchise.

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

Elena and several friends want to start a business. Each member of the group wants to actively participate in managing the business and share in any profits. Which of the following forms of business ownership would best satisfy the goals of Elena and her friends?

Bailey Nix is a limited partner in his company. A general partner in his company is going on an extended vacation and has asked Bailey to run the company while he is gone. If Bailey agrees to do so, he will no longer qualify as a limited partner.

From the franchisee's perspective, franchising offers several advantages, one of which is lower costs.

Unlike a sole proprietorship or general partnership, a general corporation is unaffected by the death or withdrawal of an owner.

Examples of institutional investors are mutual funds, insurance companies, and pension funds.

Mergers and acquisitions basically mean the same thing; the only difference is the size of the companies involved.

What is a partnership? Describe the basic features of the three major types of partnerships: general partnerships, limited partnerships, and limited liability partnerships.

The board of directors in a corporation is comprised of those who hold the most shares.

Suzanne Spinosa was just elected to the board of directors at United Bank Corporation. As a board member, who is she expected to represent the interests of?

What do the franchisees normally pay to the franchisor?

Owners of corporations are known as shareholders.

One advantage of a general corporation is that it is easy and inexpensive to form.

Crown corporations provide services to Canadians in areas where private industry cannot.