Legal Guidelines and Business Considerations

Question 1

Sole Proprietorship

Answer 1

Business owned and operated by a single person.
Financial losses and liabilities are the sole responsibility of the owner.

Question 2

Partnership

Answer 2

Two or more people who agree to operate a business and share profits and losses may form a partnership.
Partnership paperwork should be designed to address any eventuality, including the death or incapacity of one of the partners

Question 3

Express Partnership

Answer 3

Created by a contract between the parties

Question 4

Implied Partnership

Answer 4

Created and recognized by the judicial system if individuals act as partners

Question 5

Corporations

Answer 5

Designed to create a “separate” entity from the investors and operators of a business
Investors own shares of the corporation, which limits personal liability

Question 6

Subchapter S-Corporations

Answer 6

Profits flow through the business to the shareholders and are taxed as ordinary income.
Must be based in US, can only have up to 100 total investors.
Shareholders are shielded from personal liability.

Question 7

LLC and Limited Liability Partnerships

Answer 7

Profits flow through to the investors and are taxed as ordinary income.
Provide corporate veil against personal liability.
Individual states govern LLCs/LLPs

Question 8

C Corporations

Answer 8

Structured in a manner that allows the company to seek investors and conduct business activities around the world.
Do not have limits on the number of potential shareholders.

Question 9

Franchise Advantages

Answer 9

Obtain rights to a recognized brand name
Access to business and operating systems
Access to national advertising programs
Ability to control the business as long as the needs and requirements of the parent franchise company are met.
Franchisers will provide training and advice.

Question 10

Franchise Disadvantages

Answer 10

Upfront and ongoing costs for the franchise fee
Annual cost of maintaining the franchise
Association with a particular brand can be a drawback if other franchisees perform badly/unethically
Franchisee agrees to follow the franchise’s operating model

Question 11

Independent Contractor

Answer 11

Hired on a short-term basis to perform a specific task or series of tasks

Question 12

Contract Elements

Answer 12

An offer and acceptance with a mutual agreement of terms
Consideration (an exchange of valuable items)
Legality
Ability to enter into a contract with respect to legal age and mental capacity

Question 13

Negligence

Answer 13

Failing to perform as a reasonable and prudent person would under similar circumstances

Question 14

Agreements to Participate

Answer 14

Designed to protect the personal trainer from a client claiming to be unaware of the potential risks of physical activity

Question 15

Informed Consent

Answer 15

Utilized by a personal trainer to demonstrate that a client acknowledges that they have been specifically informed about the risks associated with the activity they are about to engage

Question 16

Vicarious Liability

Answer 16

Respondeat Superior. Employers are responsible for the employment actions of their employees

Question 17

Waivers

Answer 17

Must detail the types of activities and potential risks of injury that would be barred from recovering remuneration in a court of law

Question 18

Record Keeping

Answer 18

Medical History
Exercise Record
Incident Report - If an injury occurs during a workout session
Correspondence - HIPAA

Question 19

Facilities

Answer 19

Ensure that the facilities used are free from unreasonable hazards

Question 20

General Liability Insurance

Answer 20

Covers slips, trips and falls

Question 21

Professional liability insurance

Answer 21

Designed to cover activities related to their health and fitness business. Should cover personal injuries that can occur as a result of a training session

Question 22

Umbrella liability policy

Answer 22

Provides added coverage for all of the other insurance that a person may have in place

Question 23

Product liability insurance

Answer 23

In case a product fails to perform properly

Question 24

Keyman Insurance

Answer 24

Designed to compensate the business for the loss of a person who performs a unique and valuable function.

Question 25

Risk Management

Answer 25

Risk Identification
Risk Evaluation
Selection of an approach for managing each risk
Implementation
Evaluation

Question 26

Selection of an approach for managing each risk

Answer 26

Avoidance
Transfer
Reduction
Retention

Question 27

Four elements to substantiate negligence

Answer 27

Defendant had a duty to protect the plaintiff from injury
Defendant failed to uphold the standard of care necessary
Damage or injury to the plaintiff occurred
Damage was caused by the defendants breach of duty (proximate causation)