What type of business arrangement allows another entity to sell a company's products in a specific area?

A franchise is a business arrangement in which one party, known as the franchisor, grants another party, the franchisee, the right to sell its products or services in a specific area under the franchisor's brand. This arrangement typically includes a fee or royalty structure where the franchisee pays the franchisor for the use of its brand and business system. The franchisee benefits from an established brand and support from the franchisor, including marketing assistance, training, and operational guidelines, which can be crucial for success in a competitive market.

The significance of this arrangement lies in its ability to allow rapid expansion of a brand without the franchisor having to invest directly in the capital or management of each new location. This model enables both the franchisor and franchisee to benefit financially. In contrast, other options such as mergers, partnerships, and joint ventures may involve different forms of collaboration or ownership but do not specifically relate to the model of one entity selling another's products in a designated area.