ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Kora Ltd grants Bright Cafe the right to trade under the Kora brand, use its recipes and receive its training, in return for an initial fee and a percentage of Bright Cafe's revenue. Which arrangement is this?
This is a franchise. The franchisor, Kora Ltd, licenses its brand, recipes and training to the franchisee, Bright Cafe, in return for an initial fee and ongoing royalties based on revenue. Bright Cafe remains a separate business, unlike a joint venture with shared ownership.
- AA franchiseCorrect
- BA joint venture
- CA cooperative
- DA public-private partnership
Explanation
A franchisor licenses its brand and business methods to a franchisee for an initial fee and ongoing royalties, while the franchisee operates its own business. A joint venture involves shared ownership of a new venture, which is not described here.
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