Which statement best defines a franchise?

Which statement best defines a franchise?

• A. A joint venture
• B. A business where franchisor allows another operator to trade under their name
• C. A sole trader
• D. A public limited company

Answer: (B)

Franchise describes a licensing arrangement where the franchisor lets another operator run a business using the franchisor’s brand, system, and support. The franchisee operates under the franchisor’s name, gaining access to an established business model and brand recognition in exchange for upfront fees and ongoing royalties or payments. This is why the statement that best defines a franchise is that the franchisor allows another operator to trade under their name. It isn’t about shared ownership like a joint venture, nor about a single-owner sole trader, and it isn’t defined by a specific corporate form such as a public limited company.

Franchise describes a licensing arrangement where the franchisor lets another operator run a business using the franchisor’s brand, system, and support. The franchisee operates under the franchisor’s name, gaining access to an established business model and brand recognition in exchange for upfront fees and ongoing royalties or payments. This is why the statement that best defines a franchise is that the franchisor allows another operator to trade under their name. It isn’t about shared ownership like a joint venture, nor about a single-owner sole trader, and it isn’t defined by a specific corporate form such as a public limited company.