Business Law

Q: The Uniform Limited Liability Company Act is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs.

Q: In an area franchise, the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor. The area franchisee is called a(n) ________.

Q: A franchisee acquires a(n) ________ from a franchisor which allows the franchisee to use the franchisor's trademarks, service marks, trade names, and other intellectual property in the distribution of goods, services, software, and digital information.

Q: A nonmanager member of a(n) ________ LLC is treated equally to a shareholder in a corporation.

Q: A company operating its business as a(n) ________ cannot have more than 100 shareholders.

Q: An LLP has a(n) ________ tax benefit, where no taxis paid at the partnership level, and all profits and losses are reported on the individual partners' income tax returns.

Q: Ford Motor Company manufactures automobiles and franchises independently owned automobile dealers (franchisees) to sell them to the public. This is an example of ________ franchise.

Q: In a(n) ________ franchise, the franchisor provides a secret formula or the like to the franchisee. The franchisee then manufactures the product at its own location and distributes it to retail dealers.

Q: A type of franchising where the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory is known as ________ franchise.

Q: An LLC is formed by delivering ________ to the office of the secretary of state of the state of organization for filing.

Q: A member's ownership interest in an LLC is known as a ________.

Q: A person who intentionally or unintentionally (negligently) causes injury or death to another person is called a(n) ________, and is liable to persons he or she injures and to the heirs of persons who die because of his or her conduct.

Q: In a(n) ________ LLC, each member has equal rights in the management of the business of the LLC, regardless of the size of his or her capital contribution.

Q: In a(n) ________ LLC, the managers have authority to bind the LLC to contracts, but nonmanager members cannot bind the LLC to contracts.

Q: A ________ is an unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations.

Q: The creation of an LLC is pursuant of laws stated by the ________ government.

Q: The ________ codifies LLC laws and tries to establish comprehensive LLC law that is uniform throughout the United States.

Q: Explain in brief the four basic types of franchises.

Q: What are the steps a prospective franchisee must take in order to acquire a franchise? What properties are generally licensed by franchisors?

Q: Explain the extent of liability of a franchisor and a franchisee with an example.

Q: YouKnow Inc. is a corporation that creates educational resources. It grants Middlewest Public School the right to exclusively use its online encyclopedias for three years, in return for a fee. In this arrangement, YouKnow Inc. is the ________. A) donor B) trustee C) grantor D) licensor

Q: Intrepid Creations is a product design institute which provides educational courses in package design. It manages to acquire the right to use simulation software from Marco Software for a payment of $2,000 a year. There is no clause of expiration on this arrangement and the right to access the software is renewed annually. Which of the following kinds of business arrangements does the aforementioned scenario indicate? A) a licensing arrangement B) a general partnership C) a limited partnership D) a franchise

Q: Explain the process which exempts members of an LLC from double taxation.

Q: What is a distributional interest? Explain the terms of its transfer.

Q: Distinguish between a member-managed and a manager-managed LLC. Mention the exceptional actions that cannot be delegated to managers.

Q: Which of the following documents sets forth the terms and conditions of a franchise? A) the FTC disclosure document B) the franchise agreement C) the articles of incorporation D) the articles of organization

Q: Which of the following is true of the liabilities of a franchisor and a franchisee? A) The franchisor is not liable for any tort arising out of the franchise. B) Both franchisee and franchisor are jointly liable for torts committed by either. C) Franchisees are only liable on their own contracts. D) Franchisors are always liable for the torts of the franchisees.

Q: Ubiquitous Enterprises is a franchisee of HotPan chain of restaurants. One afternoon, Linda, an employee of a HotPan restaurant owned by the franchisee is mopping the floor. Gary, a customer who enters the restaurant is talking on his cell phone and does not notice Linda mopping the floor. He slips on the wet floor while walking to the counter and is injured. Who among the following is liable for Gary's injuries? A) HotPan, for not providing a "Caution: Wet Floor!" sign B) Ubiquitous Enterprises, for not having its own "Caution" sign C) Linda, for not alerting Gary D) Gary, for not noticing that the floor was wet

Q: ________ is a business arrangement that occurs when the owner of intellectual property contracts to permit another party to use the intellectual property. A) General partnership B) Leasing C) Licensing D) Joint venturing

Q: The party who grants a license is known as the ________. A) licensee B) licensor C) grantee D) grantor

Q: The party to whom a license is granted is known as the ________. A) licensee B) licensor C) grantee D) grantor

Q: The area franchisee is also called a ________. A) joint venturer B) limited partner C) subfranchisor D) strategic partner

Q: Which of the following is an instance of an area franchise? A) McDonald's franchises an independently owned restaurant to make and sell its products in Pennsylvania. B) Pepsi Co. ships Pepsi in the form of a drink concentrate which is prepared and bottled locally in Canada. C) Nokia licenses a retail dealer to retail its products in Jacksonville. D) Burger King wants to start operating in Mexico and hires a Mexican subfranchisor to sell the franchise on behalf of Burger King.

Q: In a(n) ________ franchise, the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor. A) chain-style B) area C) distributorship D) processing plant

Q: Which of the following is true of a franchise? A) The franchisor and franchisee are established as separate legal entities. B) A franchisee does not need a license to use the franchisor's trademark. C) The franchisee does not have access to the franchisor's knowledge. D) A franchise is considered as a joint venture.

Q: In a(n) ________ franchise, the franchisor manufactures a product and licenses a retail dealer to sell the product to the public. A) processing plant B) area C) distributorship D) chain-style

Q: In which of the following types of franchise does a franchisor provide a secret formula or process to the franchisee? A) chain-style franchise B) area franchise C) distributorship franchise D) processing plant franchise

Q: Limonelle Corporation owns the secret formula for a popular beverage brand Limonelle. The corporation operates through franchises in over 50 countries. It uses a secret formula to prepare the drink concentrate which is dispatched to the franchises world over. These franchises then prepare and bottle the beverage for distribution. Which of these types of franchises has Limonelle adopted? A) chain-style franchise B) processing plant franchise C) distributorship franchise D) area franchise

Q: In a ________ franchise, the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory. A) chain-style B) area C) distributorship D) processing plant

Q: Rio-Werner Corporation owns Rio's Sandwiches, a fast-food restaurant in New Jersey. It wants to operate in five cities on the west coast by means of franchisees which make and sell all menu items from Rio's Sandwiches. Which of the following would best suit the Rio-Werner Corporation's franchise plan? A) processing plant B) area C) distributorship D) chain-style

Q: Which of the following actions requires voting of all members in a manager-managed LLC? A) issuing a certificate of interest B) admitting new members C) converting an existing business into an LLC D) expanding operations in another country

Q: ________ is a duty owed by a member of an LLC to not act adversely to the interests of the LLC. A) Duty of discharge B) Duty of restitution C) Duty of loyalty D) Duty of resolution

Q: A(n) ________ is a special form of partnership in which all partners are limited partners, and there are no general partners. A) domestic LLC B) proprietorship C) LLC D) LLP

Q: ________ refers to the formal documents that must be filed at the secretary of state's office of the state of organization of an LLP to form the LLP. A) Articles of LLP B) Agreements of conversion C) Articles of organization of LLP D) Articles of amendment of LLC

Q: Which of the following is true of the management of an LLC? A) Members cannot become managers of an LLC. B) A manager-managed LLC shares management powers between members and managers. C) A nonmember can become a manager of an LLC. D) An LLC can be both member-managed and manager-managed simultaneously.

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