Final answer:
The arrangement where one company allows another to use its brand elements in exchange for a fee is called brand licensing. Trademarks, such as logos and symbols, are protected and identifiable aspects that are often the subject of licensing agreements.
Step-by-step explanation:
The contractual arrangement between firms whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee is called brand licensing. This practice allows the company that holds the trademarks to extend the reach of its brand and generate additional revenue without directly managing the new products or services using the brand. Trademarks play a significant role in brand licensing, as they are the recognizable aspects like symbols, names, or logos that distinguish goods or services and are legally protected. For example, the Nike "swoosh" on shoes and athletic gear is a well-known trademark that can be licensed to other firms.
Brand licensing is a strategic contractual arrangement wherein one company grants another the rights to use its brand elements, such as logos or symbols, for a negotiated fee. This practice serves as a mutually beneficial partnership, allowing the brand owner to expand its market presence without directly managing new products or services. The core of brand licensing lies in trademarks, legally protected symbols or names that distinguish products. For instance, the iconic Nike "swoosh" is a trademark that can be licensed to other companies, enabling them to leverage the brand's recognition. This approach not only fosters brand extension but also provides a revenue stream through licensing agreements.