Question

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 _____.

Answer 1

Franchising

Step-by-step explanation:

Franchising refers to an agreement whereby one party i.e the Franchisor gives the license thereby conferring a right to another party known as Franchisee, to operate it's chain of business in another country or nation.

In consideration for such a right, the franchisee pays a certain commission to the Franchisor for the right of running it's business. Common examples of Franchising includes, McDonalds, Dunkin Donuts, KFC, etc.

The Franchisee is also required to repatriate a certain proportion of profits to the Franchisor i.e the original parent company.

The Franchisor allows the franchisee to use it's brand name, specialized equipments and services and fund start up costs.