Entrepreneurship and Small Business (ESB) Certification Practice Exam

Which business opportunity allows an individual to obtain licenses for using a brand name?

1. Franchise

2. Consulting

3. Licensing

4. Network marketing

The correct answer is: Licensing

The business opportunity that allows an individual to obtain licenses for using a brand name is licensing. This arrangement involves a licensor, who owns a brand name, trademark, or intellectual property, granting permission to a licensee to use that brand or trademark in exchange for fees or royalties. By obtaining a license, the individual can leverage an established brand, which can lead to easier market entry and brand recognition. In contrast, franchise opportunities involve a more comprehensive business model where the franchisee not only pays for the brand name but also receives support, training, and a complete operational framework from the franchisor. While franchises do involve licensing a brand, they encompass additional obligations and structures beyond simple licensing agreements. Consulting pertains to providing expert advice in a specific field and does not typically involve licensing brand names. Instead, it's about offering services based on expertise rather than on the use of a brand. Network marketing, also known as multi-level marketing, primarily focuses on direct sales and recruitment of others to sell products, not on licensing intellectual property or brand names. Thus, licensing stands out as the option that specifically highlights the arrangement of obtaining rights to use a brand, focusing on the transactional relationship between brand owners and those seeking to utilize the brand.