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Exam 16: Small Businesses and Franchapter Ises

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Question 1

Multiple Choice

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Deb and Eve are partners in Foundations, a construction outfit. Deb manages the business. For this service, unless the partnership agreement states otherwise, she is entitled to pay in proportion to her

A) effect on the business.
B) effort.
C) capital contribution.
D) none of the choices.

E) B) and C)
F) A) and C)

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Question 2

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Regardless of the partners' consent or agreement, the voluntary dissociation of a partner begins the dissolution of the partnership.

A) True
B) False

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Question 3

Multiple Choice

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Nora and Owen do business as Property & Profit, a real estate investment partnership. In acting on the firm's behalf, Nora takes advantage of an opportunity to make a secret profit. To her firm, Nora is liable for a breach of

Nina, the owner of Organic Farm, a sole proprietorship, wants to obtain additional capital to operate. This can be accomplished by

A partner always has the right to dissociate from the partnership.

Cathy, Don, and Ethel are partners in Fruit Orchard Farms. Cathy gives notice to quit the firm, which otherwise continues to do business. This is

Quint and Reba are partners in Sofas Plus, a furniture store. Quint dissociates from the business. This ends Quint's

Without copyright or patent protection, a business firm's competitor cannot simply copy the firm's product.

State regulation of franchising is often aimed at protecting franchisees from unfair practices.

Owen plans to open Owen's Pets, a pet sales and supplies outlet, and to hire Quimby and Ruth. Owen will invest only his own money. He does not expect to make any profit for at least two years and to make almost no profit for the first three years, but he hopes to expand eventually. Which form of business organization would be most appropriate? What are the chief characteristics, advantages, and disadvantages of this form of business organization? If Owen wants to obtain additional capital to expand the business, but does not want to lose control of the firm, what is his best option?

In a sole proprietorship, the proprietor bears the burden of any liabilities incurred by the business enterprise.

Pay-Most Convenience Stores, Inc., is a franchisor. Randy operates a Pay-Most franchise. Seth is one of Randy's employees. As a franchisor, if Pay-Most controls the day-to-day operations of the business to a significant degree, it may be liable for tortious acts by

To maintain the quality of a product or service, a franchisor can exercise any degree of control over a franchisee's operation without risking potential liability.

Without creating a separate business organization, Rey starts up Street Cruisers, a pre-owned auto sales enterprise. This enterprise is

Shih was the manager of Thai Bistro, a restaurant specializing in Southeast Asian foods. Shih opened a bank account in Thai Bistro's name, signing the account signature card as "owner." Umeko, who was often at Thai Bistro and had free access to its office, told others that she was "an owner" and "a partner." She also opened a bank account in Thai Bistro's name, and signed the account signature card as "owner." Shih told Vijay, the owner of Wong Noodles Inc., that Umeko was a member of a partnership that owned Thai Bistro. On this basis, Wong Noodles delivered its goods to Thai Bistro on credit. In fact, Thai Bistro was owned by a corporation. When the unpaid account totaled more than $10,000, Wong Noodles filed a suit against Umeko to collect. On what basis might Umeko be liable for the debt?

A franchisor does not have good cause to terminate a franchise for a franchisee's failure to meet specified sales quotas.

Every act of a partner concerning partnership business binds the firm.

To prevent deception, all representations by a franchisor to a prospective franchisee must have a reasonable basis at the time they are made.

Van starts Wind Systems to make and sell turbines. Later, Van contracts with Xi to invest additional capital in the firm in exchange for 25 percent of the profits. Vaughn and Xi are not partners in Wind Systems because

Chase, the owner of Data Master, a sole proprietorship, wants to obtain additional business capital. This opportunity is most likely limited to