Phillip has a sales showroom from which he sells only Paul Bunyon farm

QUESTION

Phillip has a sales showroom from which he sells only Paul Bunyon farm equipment. What kind of business is Phillip’s? Explain.

What will be an ideal response?

ANSWER

Answer: Phillip has a product-distribution franchise, also called a distributorship. The franchisee, Phillip, has been given the right to sell trademarked products purchased from the franchisor, Paul Bunyon.
Explanation: A company that buys the rights to sell trademarked products from another company, a franchisor, is a distributorship, or a product-distribution franchise.