Exam 40: Types of Business Organizations

The death of a majority shareholder terminates a corporate enterprise.

An arrangement in which the owner of a trademark licenses others, under specified conditions or limitations, to use the trademark in purveying goods or services is a(n): ______.

The principal forms of business organization are: ______.

A sole proprietorship is taxed: _______.

Corporations are subject to a form of double taxation.

Franchisors may be found liable for the wrongful conduct of their franchisees on an apparent authority theory when the conduct of the franchisor creates an appearance of authority.

Joe and Carol decide to create Sweet Gardens, an unincorporated association for grow a community garden. If someone is injured from food grown at Sweet Gardens, they can sue Sweet Gardens directly.

Louise Feldspar obtained the exclusive right to sell TastyCrunchy Chicken in a specified area. Under the agreement, Feldspar was permitted to use the TastyCrunchy name and logo for her restaurant and she agreed to comply with TastyCrunchy's restaurant requirements. She purchased her equipment, as well as the chicken she served, from the firm. She agreed to devote a certain percentage of her revenues to promoting the TastyCrunchy operation in local media. The operation was successful from the start, and Feldspar has had no problem meeting the sales quotas imposed by TastyCrunchy. The past year TastyCrunchy informed Feldspar that it intended to open a new restaurant on an interstate highway that had just been completed in her exclusive area of trade. Because her operation would be competition for the new store, Feldspar's right to sell TastyCrunchy products and use the name TastyCrunchy was revoked. What can Louise do?

A partnership is not dissolved by the death of a partner.

A sole proprietor must file a certificate with the state and pay a single organizational fee.

Partnership agreements allow individuals to conduct their business without the requirement of a formal organizational structure.

Freedom from liability to third persons dealing with the franchise holder is one of the main reasons that franchisors grant franchises.

Holders of automobile dealership franchises are protected from bad faith termination of their dealerships by the: ______.

Most courts hold that joint ventures operate under the same legal principles as partnerships except: ______.

A franchisee cannot be a corporation.

Sally Gomez is interested in starting a new business. Although Gomez has developed her business plan and is ready to implement her ideas, she lacks the necessary finances to begin her new business. Along with a lack of finances, Gomez worries about the potential liability involved with starting a new business. Gomez would hate to lose all that she has personally accumulated to date in the event of a successful lawsuit against her. She is considering a sole proprietorship, a partnership, or a corporation as the organizing structure of her new venture. Which type of business would best serve Gomez's needs at this given time?

Generally, the members of an unincorporated association are not liable for the debts of the association by the mere fact that they are members.

Normally in a franchise operation: ______.

The Petroleum Marketing Practices Act gives gas station __________ the opportunity to continue in business by purchasing the entire premises used in selling motor fuel when the franchisor decides to sell the property and not renew a lease.

The government's permission is required to create: ______.