Which of the following is an example of a franchise?

Prepare for the SQA Higher Business Management Exam. Enhance your skills with dynamic flashcards and practice questions. Explore hints and explanations to ace your exam!

A franchise is a business model where one party (the franchisor) grants another party (the franchisee) the rights to operate a business using the franchisor's brand, products, and operational support in exchange for a fee or royalty. Starbucks is a prime example of a franchise because it allows individuals or companies to open and run their own Starbucks coffee shops, following the established brand guidelines and business practices laid out by the company. This relationship enables the franchisee to benefit from the brand's recognition, customer loyalty, and proven marketing strategies.

Other options do not exemplify the franchise model in the same way. Amazon operates as an e-commerce platform primarily selling its products and others, without offering franchise opportunities. General Motors, as a manufacturer, produces vehicles and sells them through dealerships, which operate independently rather than as franchises under GM's brand. Lastly, a local grocery store typically does not have the structure of a franchise unless it is part of a larger chain that allows franchise ownership, which in this case is unspecified.

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