Which term describes a business model where owners operate under a license from a parent company?

Which term describes a business model where owners operate under a license from a parent company?

• A. Conglomeate
• B. Franchise
• C. State Co-operations
• D. Government department

Answer: (B)

Franchising is the business model where individual owners run their own locations under a license from a parent company. The franchisor grants rights to use the brand, business system, and ongoing support in exchange for upfront fees and ongoing royalties. This setup lets the parent company expand quickly while the franchisee operates a proven concept with standardized training, marketing, and supply chains, all under agreed standards. The other options don’t fit because a conglomerate is a diversified company owning multiple unrelated firms rather than licensing a brand and system, and state-owned or government entities are public sector, not private franchise relationships.

Franchising is the business model where individual owners run their own locations under a license from a parent company. The franchisor grants rights to use the brand, business system, and ongoing support in exchange for upfront fees and ongoing royalties. This setup lets the parent company expand quickly while the franchisee operates a proven concept with standardized training, marketing, and supply chains, all under agreed standards. The other options don’t fit because a conglomerate is a diversified company owning multiple unrelated firms rather than licensing a brand and system, and state-owned or government entities are public sector, not private franchise relationships.