If you haven’t already, review the Overview for the module, read the reading assignments, and listen to the presentations/lectures. Answers can be found in the text and lectures.
Please use bullet points if appropriate. For example, if a question asks for three things, use this format to answer –
Question #1 (5 points):
Drew wants to buy Tasty Subs, a national franchise.
1. In bullet point form, list the information that Tasty Subs is legally required to provide Drew if he decides to buy the franchise (do not rely on the list in the textbook; go to the link provided on the Overview page).
2. If you were Drew, what three items would you find most valuable? Why? (Note: there isn’t a right or wrong answer for part 2. I want you to use your critical thinking skills.)
Question #2 (5 points):
Accord Inc. is a small company run by Ashley and Warner. They and eight of their friends are the shareholders. Accord has run into difficulties with its creditors and is considering bankruptcy. The creditors sue before the bankruptcy can be filed.
1. What will the creditors ask the court to do in order to hold the shareholders personally liable (i.e. the specific legal term)?
2. Identify and explain the four areas that could lead to the shareholders being personally liable for the debts.
Question #3 (5 points):
Mel recently received a promotion to Chief Marketing Officer for Old Fashioned Watches, Inc. Sales have been suffering, so off the bat, he approves an edgy multi-million dollar marketing campaign that appeals to the Millennial demographic, which is not Old Fashioned’s historic target consumer group. With this in mind, explain:
the business judgment rule,
its two duties (explain each duty and how Mel can still be protected from liability even if he violates the rule),
the four ways that the rule is applied, and
how it will positively impact Mel in this and other business decisions as CMO.