Question

An arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance to standardized operating procedures:

a) Partnership
b) Franchising
c) Joint venture
d) Acquisition

Answer 1

Franchising is an arrangement in which the manufacturer or sole distributor of a trademarked product grants exclusive local distribution rights to independent retailers in return for payment of royalties and adherence to standardized operating procedures. The franchisor provides support and training for the franchisee.

Step-by-step explanation:

The correct answer is b) Franchising.

Franchising is an arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance to standardized operating procedures. In this arrangement, the franchisor provides support and training to the franchisee, who operates the business using the franchisor's established model.

For example, McDonald's is a well-known franchise that provides its franchisees with a set formula for operating a fast-food restaurant. The franchisees pay fees to McDonald's in exchange for the right to use the brand name, receive training, and benefit from the company's supply chain support.