Which of the Following Is a Disadvantage of Franchising as a Mode

question 92

Multiple Choice

Which of the following is a disadvantage of franchising as a mode of entry into foreign markets?

• A) The franchiser has to bear development costs and risks associated with foreign expansion.
• B) While franchising offers an ideal entry mode for manufacturing firms, it often leads to undesirable results for service firms.
• C) Poor quality standards of a foreign franchisee can cause a decline in the franchising firm's worldwide reputation.
• D) The franchiser has no incentive to sustain a long-term interest in the foreign country.
• E) Franchising often forces a franchiser to take out profits from one country to support competitive attacks in another.

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Definitions:

Soviet Union

A former federation of communist republics located in northern Eurasia, existing from 1922 to 1991.

American Wheat

Refers to wheat produced in the United States, a major global exporter of wheat, known for its quality and used both domestically and internationally.

Derived Demand

The demand for a good or service that arises from the demand for another good or service; for example, the demand for steel is derived from the demand for automobiles.

Wage Rate

The amount of money a worker is paid per unit of time, such as an hour or a month.