Which term refers to the contractual arrangement where one business grants another the rights to operate using its trading methods and branding?

• A. Franchiser
• B. Franchisee
• C. Franchise
• D. Royalty Fee

Answer: (C)

Franchising involves one business (the franchiser) giving another business (the franchisee) the right to operate using its trading methods and branding under a formal agreement. The word that names this arrangement is the franchise. The franchiser provides the brand and operating system, the franchisee runs the business under those standards, and the royalty fee is the ongoing payment for the right to use the brand and methods.