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Exam 6: Forms of Business Ownership

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Question 41

Multiple Choice

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Co-operatives differ from other businesses in several ways except:

A) allocation of profits
B) purpose
C) having a long history and proven track record
D) control structure

E) A) and B)
F) All of the above

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Question 42

True/False

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Kristina is leading a group of stockholders who want to take the Bigbux Corporation private.If Kristina's group succeeds,Bigbux's stock will no longer be available to investors on the open market.

A) True
B) False

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Question 43

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Leanne is a franchisee in a restaurant chain.Thanks mainly to her hard work and people skills,her individual outlet is doing quite well.However,she has noticed that several other franchisees in the same chain have let their businesses deteriorate,especially in terms of the quality of the food they offer.Leanne should be very concerned about this trend,since it eventually could affect her own business.

Global franchising is unlikely to experience major growth due to convenience and predictable levels of service.

Continental Foods is looking at a possibility of agreeing to a conglomerate merger.A likely reason Continental may be looking at this type of merger is a desire to:

One result of taking a firm private is:

Corporations are easy to start and easy to terminate.

Ron and Jon want to go into business together.They do not want to bring in other partners,but they both want to avoid unlimited liability for any debts incurred by their new company.Ron and Jon can achieve their aims by organizing the firm as a limited partnership.

A person who buys the right to use a business name and sell a product within a given territory is called a:

Jim wants to start a business.He is attracted by the idea of being his own boss,and wants to get started with a minimum of expense and hassle.He is very confident in his abilities,so he is not particularly worried about financial risks.All of these factors suggest that Jim would favour starting his business as a sole proprietorship.

A disadvantage of corporations is that their charters are only valid for 99 years,so corporations are less permanent than other types of businesses.

If a sole proprietorship fails,the owner may lose whatever was invested in the business,but the owner's personal assets are not at risk.

In a sole proprietorship,the profits earned by the business are:

Mergers and acquisitions:

Mara plans to open a shop specializing in foods and cultural items from the Middle East.She wants to be the firm's only general partner,but she is trying to get several friends to participate as limited partners.Apparently Mara wants to:

Nutty Dough is a small chain of donut shops that is currently owned and operated by a group of seven partners.The owners think that their chain has the potential for rapid growth.One way the partners could deal with this would be to incorporate their business.

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Ted and Mark have been partners in a dry cleaning business for the past three years.They would like their brother Todd to join them.Unfortunately,partnership law states that only two partners can participate in a partnership.

Franchisors give franchisees the right to use their name and product,but franchisees must obtain all financing advice and develop all marketing strategies on their own.

The purpose of a conglomerate merger is to diversify operations and investments.