Which of the following statements about franchising is true? Select one: a. It tends to involve more short-term commitments than licensing. b. It guarantees consistent product quality. c. It is a specialized form of licensing. d. It is employed primarily by manufacturing firms.
Question
Which of the following statements about franchising is true?
Select one:
a. It tends to involve more short-term commitments than licensing.
b. It guarantees consistent product quality.
c. It is a specialized form of licensing.
d. It is employed primarily by manufacturing firms.
Solution
The correct answer is:
c. It is a specialized form of licensing.
Franchising is indeed a specialized form of licensing. In this business model, the franchisor (the original business owner) grants the franchisee (the individual or company buying into the business) the right to operate a business or sell a product or service using the franchisor's business model and brand. This is different from general licensing, where the licensee simply has the right to use a patent, trademark, trade secret, or other product.
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