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2. Q. 1. True or False: A franchisor can suggest retail prices but cannot mandate
them. (You only need to answer True or False by circling or highlighting your
answer)(5 points).
Q. 2. What are the advantages and disadvantages associated with having a sole
proprietorship? (10 points)
Q. 3. Slav is interested in buying a franchise from Oz Inc. For Slav to make
an informed decision concerning this purchase, Oz must disclose in writing or
online: (Circle or highlight your answer)(5 pts.)
Q. 4. Global Experts, L.P., is a limited partnership, with $100,000 in
declared but unpaid profits. Global Expert s creditors include Friendly Credit
Corporation for $5,000 and Gwen, one of Global Expert s limited partners, also
for $5,000. When Harry, one of Global Expert s general partners, decides to
retire, the other general partners vote to liquidate and dissolve the firm. The
limited partners, who are not asked their opinions, want Global Experts to
continue in business and file a suit against the general partners to compel this
result.
Q. 5. List the five ways in which a partner can be dissociated from a
partnership under UPA 601
Q. 6. James, Sam, and Kristen want to form Sales-to-Infinity, LLC (limited
liability company).
Q. 7. LLC s can be managed in one of two ways. State what these two options
are and explain how management of the LLC works under each option
Q. 8. True or False: Bonds represent the purchase of ownership in a business
firm. (You only need to answer True or False by circling or highlighting your
answer)
Q. 9. Linda and Rick Smith are a married couple who want to open a Pizzeria
called Smith s Spicy Pepperoni Pizzeria with their two kids - Matt and Leslie.
Linda and Rick want all four of them to be equal shareholders. However, they do
not want their children to be able to sell their shares to someone outside of
the family without their approval. What type of corporation would you recommend
the Smith s form to alleviate Linda and Rick s concerns about transfer of shares
to non-family members
Q. 10. James is a controlling shareholder in Widgets, Inc. He often uses the
Widgets, Inc. checkbook to pay not only the bills of the corporation, but also,
his own personal bills such as his mortgage payment and to treat himself to spa
days. In fact, James pays all of his own bills with the Widgets, Inc. checkbook
even though he has substantial wealth of his own. However, James spending
habits bankrupt Widgets, Inc. and Widgets, Inc. has to go out of business.
Several contractors hired by Widgets, Inc. were not paid what they were owed and
they want to sue James personally in order to receive their money since there is
no money left in Widgets, Inc.
Q. 11. Mitch is a director and officer of Numero Uno, Inc. Mitch makes a
marketing decision for the company that results in a dramatic decrease in
profits for Numero Uno and its shareholders. The shareholders accuse Mitch of
breaching his fiduciary duty to the corporation.
11(a) What is Mitch s best defense against this accusation? (5 points)
Q. 12. Corporate directors will often have many different business affiliations
and they may sometimes sit on the board of more than one corporation. What must
a corporate director do, as required by their fiduciary duties, to avoid any
possible conflict of interest or a breach of their fiduciary duties?
