What type of business strategy involves allowing individuals to use established brand names?

• A. Joint venture
• B. Franchising
• C. Licensing
• D. Merger

Answer: (B)

Franchising is a business strategy that enables individuals, known as franchisees, to use established brand names and business models in exchange for a fee or a share of revenue. This concept allows franchisees to operate under an already recognized brand, benefiting from its reputation, marketing support, and operational systems. The franchisee essentially buys the right to use the brand and follows the established protocols set by the franchisor, which enhances the chances of success compared to starting a new business from scratch.

In this model, the franchisor grants the franchisee permission to sell its products or services while maintaining quality and brand standards. This mutual relationship enables rapid expansion for the franchisor and lowers the financial risk for franchisees, making it an appealing strategy for many entrepreneurs.

The other options represent different strategies. Joint ventures involve two or more parties creating a new business entity together. Licensing allows individuals or companies to use intellectual property without running a complete business under the brand, while a merger involves two businesses combining to form one entity, rather than allowing independent operators to utilize a brand name.