question

A sole proprietor does not own the entire business.

answer

False

question

In choosing a form of business organization for a new enterprise, important factors include the ability to raise capital.

answer

True

question

The franchise is not strictly speaking a business organizational form.

answer

True

question

A sole proprietor is free to make any decision he or she wishes concerning the business.

answer

True

question

Any lawsuit against the business or its employees does not lead to unlimited personal liability for the owner of a sole proprietorship.

answer

False

question

A franchisee is generally legally independent of the franchisor

answer

True

question

A franchisee is generally economically independent of the franchisor's integrated business system

answer

False

question

In a manufacturing arrangement, a franchisor transmits to a franchisee the essential ingredients or formula to make a particular product

answer

True

question

The laws governing franchising are primarily designed to protect franchisors from dishonest franchisees

answer

False

question

No state requires franchisors to provide pre-sale disclosures to prospective franchisees.

answer

False

question

Some states require that a franchisor submit advertising aimed at prospective franchisees to the state for approval

answer

True

question

Some state require the termination of a franchise when there is no "good cause" for it to continue

answer

False

question

If a franchisee is induced to enter into a franchise contract by the franchisor's fraudulent misrepresentation, the franchisor may be liable for damages

answer

True

question

A franchisee ordinarily does not pay a fee for a franchise license (the privilege of being granted a franchise)

answer

False

question

The franchisor may require that the business use a particular organizational form and capital structure

answer

True

question

The franchise agreement is not likely to set out standards such as sales quotas and record-keeping requirements

answer

False

question

The duration of a franchise is a matter determined by federal or state statutes

answer

False

question

A franchisor can suggest retail prices for the goods that a franchisee sells but cannot mandate them

answer

True

question

When a franchise agreement contains a notice-and-cure provision, a franchisee's breach of duty of honesty and fidelity is not enough to allow the franchisor to terminate the franchise

answer

False

question

If a franchisor's decision to terminate a franchise is made in the normal course of business and reasonable notice is given, it is less likely that the termination will be considered wrongful

answer

True

question

No partner is deemed to be an agent of the other partners and of the partnership

answer

False

question

A majority of the states treat a partnership as an entity for most purposes

answer

True

question

The intent to associate is a key element of a partnership

answer

True

question

One can join a partnership even if all other partners do not consent

answer

False

question

The partnership is pass-through entity and a taxpaying entity

answer

False

question

If no fixed duration of the partnership is specified, the partnership is a partnership in perpetuity, which means that the partnership cannot be dissolved

answer

False

question

The majority rule controls decisions that significantly affect the nature of the partnership or that are outside the ordinary course of the partnership business

answer

False

question

Devoting time, energy, and skill to partnership business is a partner's duty and is not a compensable service

answer

True

question

Every act of the partner concerning partnerships business and "business of the kind" and every contract signed in the partnership's name bind the partner, but not the firm

answer

False

question

A partner may pursue his or her own interests without automatically violating the partner's fiduciary duties to the partnership and the other partners

answer

True

question

Limits on a partner's authority normally are effective only with respect to third parties who are notified of the limitation

answer

True

question

Dissociation normally entitles the partner to buy his of her interest from the partnership

answer

False

question

On a partner's dissociation, the partner's duty of loyalty ends

answer

True

question

After a partner dissociates from a continuing partnership, the partnership is no longer bound by the acts of the dissociated partner, even on a theory of apparent authority

answer

False

question

On dissolution, the creditors of the partnership, but not the creditors of the individual partners, can make claims on the partnerships's assets

answer

False

question

A limited liability partnership may exempt its partners from personal liability for any partnership obligation

answer

True

question

In a limited partnership, a limited partner has full responsibility for the partnership and for all its debts

answer

False

question

In a limited partnership, a general partner's dissociation from the firm normally will lead to dissolution unless all partners agree to continue the business.

answer

True

question

A limited partnership cannot be dissolved by court decree

answer

False

question

A limited liability limited partnership is a type of limited partnership

answer

True

question

The corporation is a creature of the common law

answer

False

question

One of the key advantages of the corporate form is the unlimited liability of its owners

answer

False

question

The state can suspend the entity's corporate status until the taxes are paid or even dissolve the corporation for failing to pay taxes

answer

True

question

When a corporation earns profits, it must pass them on the shareholders in the form of dividends

answer

False

question

A publicity held corporation is any corporation whose shares are publicly trades in a securities market

answer

True

question

If a corporation has S corporation status, it can avoid the imposition of income taxes at the corporate level

answer

True

question

The articles of incorporation serve as a primary source of authority for the corporation's future organization and business functions

answer

True

question

The registered agent is the person who can receive legal punishment and behalf of the corporation

answer

False

question

A corporation has perpetual existence unless the articles of incorporation state otherwise

answer

True

question

A court will pierce the corporate veil of a corporation that is formed to evade an existing legal obligation

answer

True

question

Voting rights in a corporation apply only to the election of the firm's board of directors

answer

False

question

Normally, a corporate board of directors appoints itself as the first board at the time the corporation is created

answer

False

question

The board of directors normally can remove a corporate officer at any time with or without cause

answer

True

question

A director or officer is liable to the corporation or its shareholders for honest mistakes of judgement and bad business decisions

answer

False

question

Shareholders own the corporation, and they have legal title to corporate property

answer

False

question

Shareholders have the power to vote to elect or remove members of the board of directors

answer

True

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