When a firm establishes a long-term contract with another firm,whereby the first firm grants the second independent business the rights to use the former's name,reputation and business format,it is referred to as a:
A)standard supply contract.
B)joint venture.
C)lease contract.
D)franchise agreement.

Question

Quizplus · Accepted Answer

The scenario described is that of a franchise agreement. In a franchise arrangement, the franchisor (the first firm) grants the franchisee (the second independent business) the right to use its brand name, business model, and reputation in exchange for fees, royalties, and other considerations.

When a Firm Establishes a Long-Term Contract with Another Firm,whereby