Many fast-food chains have operations in foreign countries because these restaurant corporations allow a foreign company to pay a fee to use the name of the fast-food restaurant. The foreign company would also need to pay a share of the profits to the fast-food corporation. What type of situation does this describe

Question

Business

Dario Roth

21 April, 14:44

Many fast-food chains have operations in foreign countries because these restaurant corporations allow a foreign company to pay a fee to use the name of the fast-food restaurant. The foreign company would also need to pay a share of the profits to the fast-food corporation. What type of situation does this describe

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Lilian Lara · Answer 1

This describes Franchising.

Explanation:

Franchising is the common type of marketing concept used by businesses these days. This strategy is adopted by the organization for expansion of its business. The owners in this type of business, sell the rights of using their business's logo, model and name to the third-party retail outlets. These outlets are independent operators who are called franchisees.

Thus, if a fast-food chain corporation gives rights to use their name and logo to the foreign company, then foreign company pays a fees to them use their name. Also, they would need to share their profits with the fast food chain corporation.