Read the given below two statements and mark the correct answer.

Assertion (A): Franchising applies to service business. Franchisers usually set strict rules and regulations as to how the franchisees should operate while running their business.
Reason (R) : The parent company is called the franchisee and the other party to the agreement is called franchiser.

Assertion (A) is true but Reason (R) is False

The correct answer is option 3- Assertion (A) is true but Reason (R) is False.

Assertion (A): Franchising applies to service business. Franchisers usually set strict rules and regulations as to how the franchisees should operate while running their business. THIS IS TRUE.
Reason (R) : The parent company is called the franchisee and the other party to the agreement is called franchiser. THIS IS FALSE as parent company is franchiser and other party is franchisee.

Franchising is a term that applies to service business. Franchising is relatively more stringent than licensing. Franchisers usually set strict rules and regulations as to how the franchisees should operate while running their business. A franchising agreement too involves grant of rights by one party to another for use of technology, trademark and patents in return of the agreed payment for a certain period of time. The parent company is called the franchiser and the other party to the agreement is called franchisee. The franchiser can be any service provider be it a restaurant, hotel, travel agency, bank wholesaler or even a retailer - who has developed a unique technique for creating and marketing of services under its own name and trademark. It is the uniqueness of the technique that gives the franchiser an edge over its competitors in the field, and makes the would-be-service providers interested in joining the franchising system. McDonald, Pizza Hut and Wal-Mart are examples of some of the leading franchisers operating worldwide.