Final answer:
A franchise is granted by Company X to Company Y, allowing Y to operate under X's name and standards, often supported by X's training and resources in exchange for fees. This differs from a trademark, which protects a company's unique brand identity.
Step-by-step explanation:
A franchise is granted by Company X to Company Y when Company Y provides services using Company X's name and conforms to Company X's standards and stipulations. In this business model, the franchisee (Company Y) purchases the rights to start a business based on the franchisor's (Company X) established model. This often includes the franchisor providing training, supply chain support, and assistance in setting up operations. In exchange for these benefits, the franchisee typically pays a franchise fee as well as ongoing royalty fees.
It is important to distinguish a franchise from a trademark, which is a symbol, word, or phrase legally registered or established by use as representing a company or product. Trademarks protect the brand identity of products and services, granting exclusive rights of use to the trademark owner, which helps consumers recognize and differentiate goods or services from one company to another.