A ________ 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.
A) joint venture
B) franchise
C) merger
D) leveraged buyout

Question

Quizplus · Accepted Answer

The arrangement described in the statement is that of a franchise. In a franchise, the franchisee (independent retailer) pays royalties to the franchisor (manufacturer or sole distributor) in exchange for the right to distribute their product or service exclusively in a certain area, using the brand and following standardized operating procedures. This allows the franchisor to expand their business without having to establish and manage each distribution location themselves.

A ________ Is an Arrangement Whereby the Manufacturer or Sole