What term refers to a contractual agreement that grants the right to operate a business using the franchisor's brand?

Franchising is the correct term for a contractual agreement that grants the right to operate a business using the franchisor's brand. In this business model, a franchisor allows a franchisee to use its trademark, product, and operational model in exchange for a fee or a share of the revenue. This arrangement enables the franchisee to benefit from the established brand recognition and support provided by the franchisor, which can include marketing assistance, training, and operational guidelines.

This model is particularly appealing as it combines the independence of running a business with the support and resources of a larger entity. Franchise agreements can span various industries, from fast food to retail, making them a popular choice for entrepreneurs looking to minimize some of the risks associated with starting a new business from scratch.

Understanding franchising in this context highlights its distinctiveness compared to other business structures like partnerships, corporations, and sole proprietorships, which do not inherently involve such a contractual arrangement with a brand owner. Each of these alternatives has different implications for ownership, liability, and management, but they do not specifically refer to the use of another company's brand under a license.