Jay wants to start a new business.With which of the following methods will he pay a share of the income from the business in return for the use of trademarks and business formulas?
A) Venture capitalism
B) Franchising
C) Buying an existing business whose purchase price includes goodwill
D) Starting a new business with loans from the SBA
E) Industrial revenue sharing

Question

Quizplus · Accepted Answer

Franchising is the method in which a person pays a share of the income from the business in return for the use of trademarks and business formulas. This allows the franchisee to operate a business under an established brand name and with support from the franchisor. The franchisor provides the business model, marketing materials, and ongoing support while receiving a percentage of the profits in return. Venture capitalism involves selling equity in the business to investors, buying an existing business may include goodwill but doesn't necessarily involve the use of trademarks or business formulas, and industrial revenue sharing typically involves sharing profits with the government or other entities. SBA loans provide funding for a new business but don't involve sharing profits or utilizing trademarks and business formulas.

Jay Wants to Start a New Business