BLAW 3391 Exam 2 TTU Final Review
Questions with Guaranteed Pass
Solutions (2025-2026) Edition.
sole proprietorship - Answer business owned and operated by one person
unlimited liability - Answer legal exposure in which an owner of a business is personally liable
for all of the debts and obligations of the business
what is the most popular form of business organization in the US? - Answer sole
proprietorship
sole proprietorship advantages - Answer -easily established
-no partners or shareholders
-only pay taxes on income generated
-all after tax profit stays with the owner
-minimal government regulation
sole proprietorship disadvantages - Answer -owner mush bear all costs of set up and
maintenance
-no others to share burden or add expertise
-unlimited liability for debts
-unlimited liability for malpractice
sole proprietorship examples - Answer tutor, housecleaning service, home health aid,
bookkeeper, freelance writer
steps to establishing a sole proprietorship - Answer 1) choose a business name. check the
state comptroller's website
2) file an assumed business name with the county clerk
3) obtain licenses, permits, and zoning clearance
4) obtain an employer identification number from the IRS website
, types of franchises: distributorship - Answer a manufacturer (the franchisor) licenses a dealer
(the franchisee) to sell its product. ex: ford or miller
types of franchises: chain-style business operation - Answer a franchise operates under a
franchisor's trade name and is identified as a member of a select group of dealers that engage
in the franchisor's business. ex: century 21, toni & guy, panera bread
types of franchises: manufacturing or processing-plant arrangement - Answer the franchisor
transmits to the franchisee the essential ingredients or formula to make a particular product.
the franchisee then markets the product either at wholesale or at retail in accordance with the
franchisor's standards. ex: pepsi
contract law - Answer the franchisee relationship is defined by a contract between the
franchisor and the franchisee
industry-specific standards - Answer laws enacted by congress to protect franchisees in certain
industries like automobile manufacturers and service stations
the franchise rule - Answer created by the FTC to protect franchisers by requiring franchisers
to disclose certain facts to a prospective franchisee to make an informed decision before signing
a contract to franchise their company
partnership (general partnership) - Answer a business owned and operated by 2 or more
persons
uniform partnership act (UPA) - Answer -all states have adopted.
-governs the operation of partnerships in the absence of an express agreement. therefore, the
partners are free to establish rules for their partnership that differ from those stated in the UPA.
-a corporation can be a partner in a partnership
in determining whether a partnership exists, courts usually look for three essential elements: -
Answer 1) a sharing of profits and losses
2) a joint ownership of the business
3) an equal right to be involved in the management of the business
Questions with Guaranteed Pass
Solutions (2025-2026) Edition.
sole proprietorship - Answer business owned and operated by one person
unlimited liability - Answer legal exposure in which an owner of a business is personally liable
for all of the debts and obligations of the business
what is the most popular form of business organization in the US? - Answer sole
proprietorship
sole proprietorship advantages - Answer -easily established
-no partners or shareholders
-only pay taxes on income generated
-all after tax profit stays with the owner
-minimal government regulation
sole proprietorship disadvantages - Answer -owner mush bear all costs of set up and
maintenance
-no others to share burden or add expertise
-unlimited liability for debts
-unlimited liability for malpractice
sole proprietorship examples - Answer tutor, housecleaning service, home health aid,
bookkeeper, freelance writer
steps to establishing a sole proprietorship - Answer 1) choose a business name. check the
state comptroller's website
2) file an assumed business name with the county clerk
3) obtain licenses, permits, and zoning clearance
4) obtain an employer identification number from the IRS website
, types of franchises: distributorship - Answer a manufacturer (the franchisor) licenses a dealer
(the franchisee) to sell its product. ex: ford or miller
types of franchises: chain-style business operation - Answer a franchise operates under a
franchisor's trade name and is identified as a member of a select group of dealers that engage
in the franchisor's business. ex: century 21, toni & guy, panera bread
types of franchises: manufacturing or processing-plant arrangement - Answer the franchisor
transmits to the franchisee the essential ingredients or formula to make a particular product.
the franchisee then markets the product either at wholesale or at retail in accordance with the
franchisor's standards. ex: pepsi
contract law - Answer the franchisee relationship is defined by a contract between the
franchisor and the franchisee
industry-specific standards - Answer laws enacted by congress to protect franchisees in certain
industries like automobile manufacturers and service stations
the franchise rule - Answer created by the FTC to protect franchisers by requiring franchisers
to disclose certain facts to a prospective franchisee to make an informed decision before signing
a contract to franchise their company
partnership (general partnership) - Answer a business owned and operated by 2 or more
persons
uniform partnership act (UPA) - Answer -all states have adopted.
-governs the operation of partnerships in the absence of an express agreement. therefore, the
partners are free to establish rules for their partnership that differ from those stated in the UPA.
-a corporation can be a partner in a partnership
in determining whether a partnership exists, courts usually look for three essential elements: -
Answer 1) a sharing of profits and losses
2) a joint ownership of the business
3) an equal right to be involved in the management of the business
