What is a franchise?

A franchise is defined as a specific kind of business model that grants individuals or groups the rights to operate a business under a well-established brand name. This arrangement typically includes licensing agreements that allow the franchisee to use the franchisor's trademarks, products, and operational systems in exchange for initial fees and ongoing royalties.

This model is beneficial for both parties: the franchisee gains access to an established brand, reducing the risks associated with starting a new venture, while the franchisor expands their brand market reach without the need for significant capital investment. The franchisee also receives support in terms of training, marketing, and operational guidelines, which contributes to the overall success of the franchise.

In contrast, other options presented do not accurately describe a franchise and focus on different aspects of business operation. A contract for selling products in bulk pertains to wholesale arrangements, a partnership structure relates to the legal formation of business entities involving two or more individuals, and an agreement among competitors to set prices refers to anti-competitive practices, which are illegal in many jurisdictions.