BUSINESS AND THE

BUSINESS ENVIRONMENT
LO1
 FRANCHISING
• A franchise (or franchising) is a method of distributing products or
services involving a franchisor, who establishes the brand's trademark or
trade name and a business system, and a franchisee, who pays a royalty
and often an initial fee for the right to do business under the franchisor's
name and system.
 JOINT VENTURE
• A joint venture (JV) is a business arrangement in which two or more
parties agree to pool their resources for the purpose of accomplishing a
specific task. This task can be a new project or any other business activity.
Each of the participants in a JV is responsible for profits, losses, and costs
associated with it.
 Features of JV

• 1. Agreement
• 2. Parties
• 3. No Separate Laws
• 4. Duration
• 5. Create Synergies
• 6. No Special Name for the Venture
• 7. Shared Control Over the Venture
• 8. New Innovation
• 9. Shared Resources
• 10. Sharing of Risk and Profits
• 11. Flexibility
 Types of Joint Ventures (JV)
There are four main types of JV
• Project-based joint venture
• Vertical Joint Venture
• Horizontal Joint Venture
• Functional-based Joint Venture
 LICENSING
• Licensing is defined as a business arrangement, wherein a company
authorizes another company by issuing a license to temporarily access its
intellectual property rights, i.e. manufacturing process, brand name,
copyright, trademark, patent, technology, trade secret, etc. for adequate
consideration and under specified conditions.
 DIFFERENCE
• (i) Licensing is an agreement between licensor and licensee whereas
franchising is an agreement between franchisee and franchiser.
• (ii) Licensing means permitting other party in a foreign country to
produce and sell goods under trademark, patents whereas franchising
means sell or distribute the branded products in a specific geographical
area, e.g., through its franchising system McDonalds operates first food
restaurants in the whole world.