What is a franchise?

A franchise is best defined as a type of business owned by independent operators. In this model, the franchisor grants the franchisee the rights to operate a business under its brand and sell its products or services. The franchisee typically pays an initial fee and ongoing royalties in exchange for the support and branding provided by the franchisor.

The franchise model allows independent operators to benefit from an established brand's reputation and business practices, which can provide a higher chance of success compared to starting a business from scratch. In addition, franchises often receive training, marketing support, and access to supply chains, which can significantly enhance operational efficiency.

The other options do not accurately describe what a franchise entails. For instance, merging companies involves creating a new legal entity, which is different from the operational and ownership structure of a franchise. A government grant would refer to funds provided by the government to support specific business operations, which is unrelated to the franchising model. Lastly, public policies that protect consumer rights focus on regulations meant to ensure fair treatment of consumers, distinct from the concept of a franchise business.