Asked by Carter Brown on Jun 04, 2024
Verified
Domestic firms developing a global entry strategy might consider franchising. Before deciding on franchising as a strategy however, firms must understand the disadvantages. What is a disadvantage of franchising?
A) the franchisor has limited control over the market operations in the foreign country
B) the franchisee must sign a non-compete agreement
C) there are higher tariffs associated with franchise operations
D) franchising is the riskiest way to enter a foreign market
E) franchises are not responsible for the quality of products produced
Franchising
A contractual agreement between a franchisor and a franchisee that allows the franchisee to operate a business using a name and format developed and supported by the franchisor.
Market Operations
Activities involved in managing and promoting the selling and buying of products or services within a market.
- Master the nuance and strategic reasoning behind adopting franchising as a method for international market entry.
Verified Answer
MP
morgan pelleyJun 07, 2024
Final Answer :
A
Explanation :
The franchisor has limited control over the market operations in the foreign country as the franchisee manages day-to-day operations, making it difficult for the franchisor to maintain consistency in branding and quality control.
Learning Objectives
- Master the nuance and strategic reasoning behind adopting franchising as a method for international market entry.