Question

1. Individuals living in Idaho are interested in creating a corporation called Ink, Inc. All its business activities will be conducted in Idaho. In incorporating, which of the following is true?

A.since all its shareholders live in Idaho, the corporation must incorporate in Idaho.

B.the corporation can incorporate in any state such as Delaware.  

C.since all its activities will be in Idaho, the corporation must incorporate in Idaho.

2.Business Law Humor, Inc. grants a franchise to Naomi to operate a Business Law Humor Comedy Club. Business Law Humor may require Naomi to pay a percentage of her

A. local advertising costs.

B.annual receipts.

C.weekly payroll expense.

  

Answer 1

Question # 1. The correct option is C.since Since all its activities will be in Idaho, the corporation must incorporate it in Idaho.

Explanation: As per the corporation law the corporation needs to be incorporated where they will do all the activities irrespective of the residence of the shareholders.

Question # 2. The correct option is B. Annual Receipts

Explanation: A franchisor does not control the franchise directly and therefore they won't ask Naomi to pay for payroll expense and they are also not supposed to pay any local advertising cost related to the promotion being done by the Business Law Humor. The Naomi will have to pay Business Law Humor a certain pre-agreed percentage of her annual receipts as per their franchise agreement.