Which of the following is true of franchises?
A) They involve a parent company and an independent firm entering into a contractual relationship to set up and operate a business in a particular way.
B) They involve a group of independent retailers uniting and agreeing to pool buying and managerial resources to improve competitive position.
C) They involve a wholesaler contracting with a number of retailers performing channel functions for it.
D) They involve a high degree of interorganizational planning and management and depend on the presence of a channel leader.

Question

Which of the following is true of franchises?
A) They involve a parent company and an independent firm entering into a contractual relationship to set up and operate a business in a particular way.
B) They involve a group of independent retailers uniting and agreeing to pool buying and managerial resources to improve competitive position.
C) They involve a wholesaler contracting with a number of retailers performing channel functions for it.
D) They involve a high degree of interorganizational planning and management and depend on the presence of a channel leader.

Quizplus · Accepted Answer

Franchises involve a parent company and an independent firm entering into a contractual relationship to set up and operate a business in a particular way. In a retail cooperative organization, a group of independent retailers unite and agree to pool buying and managerial resources to improve competitive position. In a wholesaler-sponsored voluntary chain, a wholesaler contracts with a number of retailers and performs channel functions for them. In administered vertical marketing systems, there is a higher degree of interorganizational planning and management than in a conventional channel. The dependence in these systems can result from the existence of a strong channel leader such that other channel members work closely with this company in order to maintain a long-term relationship.

Which of the Following Is True of Franchises