Multiple Choice
Which term best describes the process of planning, staffing, leading, and organizing employees within a business organization?
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1. Introduction to Accounting
Business Organization
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Which type of business organization leases its trade name and operating system to another person or entity?
A
Franchise
B
Partnership
C
Corporation
D
Sole Proprietorship
Verified step by step guidance1
Understand the concept of a franchise: A franchise is a type of business organization where the franchisor (the owner of the trade name and operating system) grants the franchisee (another person or entity) the right to operate under their trade name and use their established business model.
Compare the characteristics of a franchise with other business organizations: Partnerships involve shared ownership and responsibilities between two or more individuals, corporations are separate legal entities owned by shareholders, and sole proprietorships are businesses owned and operated by a single individual.
Identify the key feature of a franchise: The leasing of a trade name and operating system is unique to franchises, as it allows the franchisee to benefit from the established reputation and operational framework of the franchisor.
Eliminate incorrect options: Partnerships, corporations, and sole proprietorships do not involve leasing a trade name and operating system to another entity as a core characteristic.
Conclude that the correct answer is 'Franchise,' as it matches the description provided in the problem.
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