Asked by Taylor Peimbert on Apr 30, 2024
Verified
Digital Wizards Inc., a franchisor of computer technicians, wishes to standardize the pricing practices of its franchisees because they have engaged in price-cutting to increase their respective shares of the market. The most prudent action might be for Digital Wizards to
A) mandate the prices at which its franchisees sell their services.
B) suggest the prices at which its franchisees sell their services.
C) require its franchisees to pay a premium based on their market share.
D) threaten its franchisees with a suit for material breach of contract.
Price-Cutting
A strategy where prices are significantly reduced, often below those of competitors, to attract customers or increase market share.
Pricing Practices
The methods and strategies businesses use to set and adjust prices for their products or services.
Standardize
To make uniform or consistent by adhering to a set standard or protocol, often to ensure quality or interoperability.
- Understand the rationale behind standardizing franchise operations, including pricing practices.
Verified Answer
BS
Breanna SeawellMay 01, 2024
Final Answer :
B
Explanation :
Suggesting prices allows Digital Wizards Inc. to guide its franchisees towards standardized pricing without engaging in price fixing, which could raise legal issues. This approach encourages uniformity while respecting the autonomy of the franchisees.
Learning Objectives
- Understand the rationale behind standardizing franchise operations, including pricing practices.