The correct answer is: A. Leasing for a prescribed period of time, the right to use firm’s successful business model and brand.
Franchising is a business arrangement in which a company (the franchisor) grants another company (the franchisee) the right to use its brand name, business model, and other intellectual property in exchange for a fee. The franchisee then operates a business under the franchisor’s name and system.
There are many benefits to franchising for both the franchisor and the franchisee. For the franchisor, franchising can be a way to expand its business quickly and without having to invest a lot of capital. The franchisee benefits from the franchisor’s experience and expertise, as well as from the use of its brand name and business model.
However, franchising is not without its risks. The franchisor must carefully select its franchisees and provide them with the necessary training and support. The franchisee must also be willing to work hard and follow the franchisor’s rules and guidelines.
Overall, franchising can be a successful business model for both the franchisor and the franchisee. However, it is important to carefully consider the risks and rewards before entering into a franchise agreement.
Here is a brief explanation of each option:
- Option A: Leasing for a prescribed period of time, the right to use firm’s successful business model and brand. This is the correct answer. Franchising is a business arrangement in which a company (the franchisor) grants another company (the franchisee) the right to use its brand name, business model, and other intellectual property in exchange for a fee. The franchisee then operates a business under the franchisor’s name and system.
- Option B: Selling out a successful business model and brand. This is not correct. In franchising, the franchisor does not sell its business model or brand to the franchisee. The franchisee only has the right to use the franchisor’s brand name and business model for a prescribed period of time.
- Option C: Hiring a firm’s successful business model and brand. This is not correct. In franchising, the franchisee does not hire the franchisor. The franchisee is an independent business owner who operates a business under the franchisor’s name and system.
- Option D: None of the above. This is not correct. Option A is the correct answer.