The practice in which the parent firm is obligated to provide its brand name,specialized equipment and/or service,and sometimes to fund some startup costs,to another firm in return for an annual fee is known as _____.

Question

Quizplus · Accepted Answer

The practice described is franchising, where the parent firm (franchisor) grants the right to another firm (franchisee) to use its brand name, equipment, and know-how in return for fees and royalties. Licensing involves a similar arrangement but usually only involves the use of a particular technology or patent. Foreign acquisition and joint venture involve different types of international business relationships. Export-import business refers to trade between countries and is not relevant to the given scenario.

The Practice in Which the Parent Firm Is Obligated to Provide