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Question
Diner Coffee Shops, Inc., sells franchises. Diner imposes on its franchisees standards of operation and personnel training methods. What is the potential pitfall to Diner if it exercises too much control over its franchisees?Answer
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Related questions
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Andy wants to open AAA Advertising Agency with the assistance of an attorney. To find an attorney, Andy could
a. ask other small businesspersons.
b. look in a telephone directory.
c. review listings in the Martindale-Hubbell Law Directory.
d. all of the above.
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No state has a law that allows employees access to their personnel records.
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A corporate agent is personally liable for contracts entered into on the corporation's behalf.
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A shareholder agreement defines relative ownership rights and interests.
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A buy-sell agreement establishes the criteria for the price to be paid a shareholder for his or her ownership interest.
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No capital can be raised through an offering of stock without registering the shares as securities with the Securities and Exchange Commission.
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All corporate business forms offer limited liability to their owners.
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The law considers all new, single-owner businesses to be limited liability companies unless the owner affirmatively adopts some other form.
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Errors in bookkeeping can provoke litigation.
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A businessperson cannot incur a penalty for violating a law or regulation of which he or she is unaware.
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Fact Pattern 41-1
Adam, a director of Beta Computer Company, learns that a Beta engineer has developed a new, significantly faster computer chip. Adam buys Beta stock and tells his friend Cathy, who also buys Beta stock. When the new chip is announced three weeks later, Adam and Cathy sell their stock for a big profit.
Refer to Fact Pattern 41-1. Regarding Adam's profits on the purchase and sale of Beta stock, under Section 16(b) of the Securities Exchange Act of 1934 Beta may recapture
a. all of Adam's profits.
b. half of Adam's profits.
c. 10 percent of Adam's profits.
d. none of Adam's profits.
Q:
Fact Pattern 41-1
Adam, a director of Beta Computer Company, learns that a Beta engineer has developed a new, significantly faster computer chip. Adam buys Beta stock and tells his friend Cathy, who also buys Beta stock. When the new chip is announced three weeks later, Adam and Cathy sell their stock for a big profit.
Refer to Fact Pattern 41-1. Under SEC Rule l0b-5, Adam would not be liable if he had waited to buy Beta stock until
a. after Adam told Cathy of the new chip.
b. after Cathy bought Beta stock.
c. after the public announcement of the chip.
d. just before the chip was announced.
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To raise capital to form Apex Corporation with Bert, Carla sells bonds and stock in other companies, and plans to register an initial public offering under the Securities Act of 1933. SEC Rule l0b-5 covers
a. most forms of securities.
b. only bonds.
c. only securities registered under the Securities Act of 1933.
d. only stock.
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Alpha, Inc., a corporation traded on a national stock exchange, wants to offer bonds for sale to the public. Beta Insurance Company, a state-regulated insurance company, wants to offer annuity contracts for sale to the public. Before any sale, registration must be made with the SEC for
a. Alpha's bonds and Beta's annuity contracts.
b. Alpha's bonds only.
c. Beta's annuity contracts only.
d. neither Alpha's bonds nor Beta's annuity contracts.
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Consumer Products Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before the firm sells its securities, it must provide investors with
a. a prospectus.
b. a registration statement.
c. a tombstone ad.
d. all of the above.
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Generally, states have disclosure requirements patterned after federal securities law.
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Private parties cannot sue violators of Section 10(b) and Rule 10b-5.
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Any corporation with more than $10 million in assets must register with the Securities and Exchange Commission.
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Under the Alien Tort Claims Act of 1789, Marco, or any foreign citizen, can bring a civil suit in a U.S. court
a. for a violation of a treaty of the United States only.
b. for a violation of a treaty of the United States or of the law of nations.
c. for a violation of the law of nations only.
d. under no circumstances.
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Venezuela seizes the property of World Oil Company, a private business, for a proper public purpose and pays the owners just compensation. This is
a. a confiscation.
b. a dumping.
c. a licensing.
d. an expropriation.
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China and India form an agreement to govern their commercial exchanges with one another. This is
a. a bilateral agreement.
b. a lateral agreement.
c. a multilateral agreement.
d. a unilateral agreement.
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Overseas Trading Corporation is a U.S. firm that does business here and abroad. International law establishes standards for
a. nations and private transactions that cross national borders.
b. nations only.
c. neither nations nor private transactions that cross national borders.
d. private transactions that cross national borders only.
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Congress cannot impose any restrictions on exports except taxes.
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Expropriation, even with the payment of just compensation, violates generally observed principles of international law.
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A party to a licensing agreement generally agrees to pay royalties on some basis.
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Confiscation occurs when a government seizes a private property for a proper public purpose and awards just compensation.
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Frank is an accountant. Gail is an attorney. Which professional is most restricted from disclosing his or her client's communication?
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Alice prepares tax returns for Big Stores, Inc., and other business firms. Under the Internal Revenue Code, Alice may be liable for
a. only negligent understatement of a client's tax liability.
b. only willful understatement of a client's tax liability.
c. negligent or willful understatement of a client's tax liability.
d. none of the above.
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Alpha Corporation and Beta, Inc., form a business trust. Charlie Company and Delta Corporation form a joint stock company. Eagle Corporation and Fine Goods, Inc., form an incorporated cooperative. What features do these combinations of business organization have in common?
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Jane, Kyle, and Lynn organize a nonprofit businessJKL Markets, Inc.to buy groceries from wholesalers and sell them to consumers who buy a membership in JKL. Because the firm is a nonprofit entity, it is able to sell the groceries for less than a commercial grocer could. What form of business organization is JKL Markets? Is it significant that JKL is incorporated?