Business Ownership Knowledge Test! Quiz

A disadvantage of a franchise is the high cost to purchase and fees. Franchises often require a significant investment to buy into the business and ongoing fees to maintain the franchise agreement. This can be a barrier for individuals or small businesses with limited financial resources. The high costs can limit the accessibility of franchises to a wider range of potential entrepreneurs.

As a sole proprietor, one of the biggest risks is unlimited liability. This means that the owner is personally responsible for all debts and liabilities of the business. Unlike other business structures, such as corporations, there is no legal separation between the business and the owner. Therefore, if the business incurs debts or faces legal issues, the owner's personal assets can be seized to satisfy those obligations. This can put the owner's personal finances and assets at risk, making unlimited liability a significant concern for sole proprietors.

A sole proprietorship does not have limited liability for the owner. In fact, one of the main characteristics of a sole proprietorship is that the owner has unlimited personal liability for the business's debts and obligations. This means that if the business cannot pay its debts, the owner's personal assets can be used to satisfy those debts. Therefore, the correct answer is False.

All businesses are required to pay tax or taxes on their profits. This is a legal obligation imposed by the government to generate revenue. Taxes are used to fund public services, infrastructure development, and social welfare programs. By paying taxes, businesses contribute to the overall functioning of the economy and society. The specific amount of tax paid by a business depends on factors such as the tax rate, the type of business, and the jurisdiction in which it operates.

When a corporate owner dies, the corporation does not cease to trade. A corporation is a separate legal entity from its owners, and it can continue to operate and trade even if the owner passes away. The ownership of the corporation may be transferred to the owner's heirs or beneficiaries, allowing the business to continue functioning. Therefore, the statement is false.

A partnership is not always made up of 2 people. A partnership can be formed by two or more individuals or entities who agree to work together and share the profits and losses. It is not limited to just two people, and can involve multiple partners depending on the agreement made between them. Therefore, the statement that a partnership is always made up of 2 people is false.

This statement is incorrect. Franchises are not a free and easy way to trade. In fact, starting a franchise involves significant costs such as franchise fees, royalties, and initial investments. Additionally, operating a franchise requires following strict guidelines and regulations set by the franchisor, which may limit the freedom of the franchisee to make independent business decisions. Therefore, the statement is false.

A sole proprietorship, sole trader, or sole trader company is the business structure that allows an individual to be their own boss, make their own decisions, and keep all of the profits to themselves. In this type of business, there is no legal distinction between the owner and the business entity, meaning the owner has unlimited liability for any debts or legal issues. This structure is suitable for small businesses or individuals who want complete control and ownership of their business.

The given statement is "Company types are optional." The correct answer is False. This means that company types are not optional, indicating that they are required or mandatory.

Not all companies are required to register with the Companies House. The Companies House is the official registrar of companies in the UK, and while most companies are indeed required to register with them, there are certain exceptions. For example, some partnerships and sole traders may not need to register. Therefore, it is not true that all companies must register with the Companies House.

The correct answer includes Subway, KFC, and McDonald's. These are all examples of UK franchises because they are international fast food chains that have established locations in the UK. Franchises are businesses that operate under a parent company's brand and business model, and these three chains have successfully expanded their operations in the UK through franchising.

A partnership offers the advantage of having access to more capital, money, and advice. This means that the partners can contribute their own funds to the business, increasing the available financial resources. Additionally, partners can bring in their expertise and experience, providing valuable advice and guidance in decision-making processes. This combination of increased capital and diverse perspectives can contribute to the growth and success of the partnership.