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118. The owners of a limited liability company are called members.
a. True
b. False
119. The owners of limited liability companies are called shareholders.
a. True
b. False
120. If a member of a limited liability company dies, the company must terminate.
a. True
b. False
121. Limited liability companies, like corporations, are presumed to have perpetual life.
a. True
b. False
122. A limited liability company can be recreated to avoid termination.
a. True
b. False
123. In In re 1545 Ocean Avenue, LLC, when the members of an LLC got into a dispute they had the right to force an
end to the existence of the entity.
a. True
b. False
124. In In re 1545 Ocean Avenue, LLC, when the members of an LLC got into a dispute the party wishing to keep the
entity in existence had to buy out the unhappy member.
a. True
b. False
125. In In re 1545 Ocean Avenue, LLC, when the members of an LLC got into a dispute the court reformed the
structure of the entity.
a. True
b. False
126. In a corporation, the profits are taxed and then the profits are taxed again when paid to the shareholders, so there is
double taxation of corporate profits.
a. True
b. False
127. The income from a partnership is taxed as the personal income of the partners.
a. True
b. False
128. Partners in partnerships and shareholders in corporations, unlike proprietors, have liability limited to their amount of
investment.
a. True
b. False
129. Shareholders in corporations and limited partners in limited partnerships have liability limited to the sum they
invested in the business, even for tort liability.
a. True
b. False
130. LLC members have unlimited liability for torts committed in the name of the LLC.
a. True
b. False
131. If the court "pierces the corporate veil" it may hold the shareholder(s) personally liable for corporate debts.
a. True
b. False
132. Partners in a partnership, like corporate shareholders, have the right to sell their ownership shares whenever they
want to whoever they want.
a. True
b. False
133. In K.C. Roofing Center v. On Top Roofing, the courts held that the owners of a corporation abused its legal
structure and would be personally liable for its debts.
a. True
b. False
134. In K.C. Roofing Center v. On Top Roofing, the courts held that the owners of a corporation were not liable for
the debts of the business entity.
a. True
b. False
135. It may be difficult to sell a partnership share in a partnership because determining the market value of the share
may be difficult.
a. True
b. False
136. A closed corporation typically limits the right to transfer stock.
a. True
b. False
137. When the sole owner of a corporation dies, the corporation ceases to exist and the business must be reorganized.
a. True
b. False
138. In most states, corporations legally exist for fifty years, then must renew their corporate charters.
a. True
b. False
139. The retirement of a majority shareholder brings about the termination of the corporation.
a. True
b. False
140. Franchise operators usually pay a franchise fee to buy the franchise.
a. True
b. False
141. The most common form of franchise is the product distributorship.
a. True
b. False
142. The two types of franchises allowed are product franchises and brand-name franchises.
a. True
b. False
143. Most franchisors provide trade name, but are not allowed to detail operations.
a. True
b. False
144. The federal agency most concerned with regulating the franchise industry is the Department of Commerce.
a. True
b. False
145. The Franchise Rule requires franchisors to produce a detailed disclosure document before any money is paid by
franchisees.
a. True
b. False
146. The offering circular that franchisors must produce contains information about the financial details of all existing
franchises.
a. True
b. False
147. The offering circular that franchisors are required to produce contains information about the background and
experience of the executives of the franchise firm.
a. True
b. False
148. The Franchise Rule requires franchise sellers to have their materials reviewed by the Federal Trade Commission
before franchises may be sold to the public.
a. True
b. False
149. Some states have adopted regulations for the sale of franchises that go beyond the federal requirements.
a. True
b. False
150. The FTC Franchise Rule prohibits states from having additional regulations on franchises that go beyond the federal
rules.
a. True
b. False
151. Federal regulation prohibits franchise agreements from containing territorial restrictions.
a. True
b. False
152. Due to the inability to control sales, the government has, to date, prohibited the marketing of franchise operations
over the Internet.
a. True
b. False
153. Franchisors may charge franchisees an up-front payment, but may not charge them a royalty fee based on annual
sales.
a. True
b. False
154. Under the Uniform Franchise Act, franchisors have the right to terminate franchisees that are found to be in
"serious violation" of the terms of the franchise agreement.
a. True
b. False
155. Parent franchise companies may limit the territory in which a franchisee operates.
a. True
b. False
156. Franchise companies may not control the use of the company name of a franchisee that has the legal right to use
the name.
a. True
b. False
157. In Dunkin' Donuts v. Sandip the court held that the parent company (Dunkin') attempted to terminate a franchise
operation in violation of the terms of the franchise agreement.
a. True
b. False
158. In Dunkin' Donuts v. Sandip the court held that the parent company (Dunkin') properly terminated a franchise
operation due to violations of operating requirements.
a. True
b. False
159. In Dunkin' Donuts v. Sandip the court held that the parent company (Dunkin') could collect attorney fees and
cost from a franchisee it sued for improper operations.
a. True
b. False
160. In Eagles Landing Development, LLC v. Eagles Landing Apartments, LP, where the LLC built apartments
for the LP, but the LP did not pay all sums owed, the appeals court held that the limited partners in the LP were
not liable for the unpaid debt of the LP.
a. True
b. False
161. LLC built apartments for the LP, but the LP did not pay all sums owed, the appeals court held that the limited
partners in the LP were liable for the sums not paid as they signed personal guarantee agreements.
a. True
b. False
