Question

next jim-bob's wants to expand to vancouver, but it is too far and too costly to ship the pasta sauce in glass jars. jim-bob's management approached a local producer in vancouver, cool's pasta parlour inc. cool's knows how popular the jim-bob's sauce has gotten and would like to produce the pasta sauce locally to sell in the cool pasta parlour restaurants and to local grocery stores. jim-bob's is very protective of their secret recipe for the pasta sauce, but they agree, for a fee of $0.50 per jar (minimum of 10,000 jars per year), that they will provide to cool's pasta (i) the secret recipe for the pasta sauce and (ii) the labels for the pasta jars that have the jim-bob company name and logo with the picture of jim's nonna (grandmother). cool's pasta will produce the jim-bob's pasta sauce and will be allowed to sell it in the greater vancouver area. this is an example of a:_____.

Answer 1

This is an example of a licensing agreement.

Step-by-step explanation:

Licensing agreements are legal contracts between two parties where one party, the licensor, grants the other party, the licensee, the rights to use certain intellectual property, such as trademarks, patents, or, in this case, a secret recipe and branding elements. In this scenario, Jim-Bob's is the licensor, providing Cool's Pasta Parlour Inc. with the secret recipe for their pasta sauce and the labels featuring the company name, logo, and Jim's nonna's picture for a fee of $0.50 per jar, with a minimum annual requirement of 10,000 jars. The licensor retains control over its intellectual property while allowing the licensee to produce and sell the product in a specific geographical area, in this instance, the greater Vancouver area.

The $0.50 per jar fee, along with the minimum annual requirement, represents the financial terms of the licensing agreement. The fee structure ensures that Jim-Bob's is compensated for the use of its proprietary recipe and branding. The minimum annual requirement serves to guarantee a certain level of production volume, which can be beneficial for both parties, providing a steady income stream for Jim-Bob's and ensuring that Cool's Pasta Parlour Inc. is committed to a significant level of production. Overall, this licensing agreement allows Jim-Bob's to expand its market presence to Vancouver without the logistical challenges of shipping glass jars, while Cool's Pasta Parlour Inc. gains the rights to produce and sell a popular product in its local market.