Small Business Basic
What form of business automatically applies to a single-owner operation unless another form is adopted?
Sole proprietorship
Who keeps all the profits in a sole proprietorship?
The owner
What type of franchise is a McDonald’s?
A chain-style business operation
What are the three elements that establish a partnership under the UPA?
Joint ownership, profit/loss sharing, and equal management rights
What duty requires a partner to avoid conflicts of interest and self-dealing?
Duty of loyalty
What are two critical forms of intellectual property protection for small businesses?
Trademarks and trade secrets
What is one major disadvantage of a sole proprietorship?
Unlimited personal liability
What federal agency enforces the Franchise Rule?
Federal Trade Commission (FTC)?
What is the name of the law that governs partnerships if there’s no express agreement?
The Uniform Partnership Act (UPA)?
What rights do all partners generally have unless agreed otherwise?
Equal management and equal sharing of profits/losses
Why might a bank loan be preferable to equity financing for a small business owner?
It allows the owner to retain full ownership and control
What happens to a sole proprietorship when the owner dies?
The business is automatically dissolved
Name a common cause for franchise termination.
Failure to meet sales quotas, breach of contract, insolvency, etc.
What type of partnership includes at least one general and one limited partner?
Limited partnership (LP)?
What type of liability means all partners are individually responsible for partnership debts?
Joint and several liability
What federal agency offers loan support to small businesses?
U.S. Small Business Administration (SBA)
What kind of taxes does a sole proprietor pay?
Personal income tax only
What legal concept allows a franchisee to fix a breach before termination?
Opportunity to cure
In which partnership form are all partners protected from malpractice by others?
What is a limited liability partnership (LLP)?
What triggers a partner buyout and ends management rights?
Dissociation
Name one legal requirement for forming any business.
Business name registration, occupational licensing, or state tax registration
What makes raising capital difficult for sole proprietors?
Lack of continuity and personal liability risks
In a franchise contract, what party generally holds more power?
The franchisor
What event begins the process of winding up a partnership?
Dissolution
What agreement outlines how a partner's interest is bought out in case of dissociation?
Buy-sell agreement