Final answer:
A franchise is a contractual agreement where the franchisor grants the franchisee the right to sell products or provide services, usually in exchange for fees. McDonald's is a classic example of such a franchise system.
Step-by-step explanation:
True, a franchise is indeed a contractual arrangement where the franchisor allows the franchisee the right to sell certain products and/or to provide specific services. This business model involves the franchisee paying initial franchise fees and ongoing royalty fees to the franchisor.
In return, the franchisor typically offers the franchisee a variety of supports, such as training, a proven business model, and supply chain assistance. Companies like McDonald's are notable examples of franchises, and they play a significant role in the standardization of services and products across multiple locations. However, while exclusive dealing between manufacturers and dealers can sometimes encourage competition, they can also have the opposite effect if they lead to anti-competitive practices