There Are Several Disadvantages of Franchising as an Entry Mode

question 95

Multiple Choice

There are several disadvantages of franchising as an entry mode. Which of the following is one of them?

• A) There is little incentive for the franchisee to build a profitable operation as quickly as possible.
• B) The firm incurs many of the costs and risks of opening a foreign market on its own.
• C) Franchising may inhibit the firm's ability to use the profits obtained to open additional businesses in the same country.
• D) Franchising may inhibit the firm's ability to take profits out of one country to support competitive attacks in another.

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Definitions:

Statute of Frauds

A legal principle that requires certain types of contracts to be in writing to be enforceable.

Registration

The act of recording information or data in an official list or database, often required by law for specific activities, businesses, or ownership claims.

Leasehold Interests

A tenant's rights to use and occupy real estate for a predetermined period as defined in a lease agreement.

Indefinite Term

A contract or agreement duration that lacks a specific end date, often continuing until one party gives notice of termination.