Skip to content

CS Executive · Setting Up of Business, Industrial and Labour Laws · Business Collaborations

Kaveri Textiles Ltd grants Rohan Apparels, an unrelated firm, the right to use its brand name, designs and operating methods in return for an upfront fee and a percentage of sales, while Rohan remains independently owned. Which form of business collaboration is this?

This is franchising. The brand owner licenses its name, designs and operating system to an independent business in return for an upfront fee and a sales-based royalty, with no shared ownership. It is not an equity joint venture, amalgamation or lender consortium because no jointly owned entity or combination arises.

  1. AFranchisingCorrect
  2. BEquity joint venture
  3. CAmalgamation
  4. DConsortium of lenders

Explanation

Franchising is where the franchisor permits the franchisee to use its brand and business system for fees or royalties, and the franchisee remains independently owned. No new jointly owned entity is created, so it is not an equity joint venture. It involves no combination of companies and no lending group.

Did you get it right without looking?

One question tells you little. A timed set on Business Collaborations shows your real accuracy, how long you take and where you lose marks.

Practise Business CollaborationsFree diagnostic mock

More Business Collaborations questions