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) Franchising leads to undesirable results for service firms.
C) It is difficult to maintain quality control across foreign franchisees that are distant from the franchiser.
D) The franchiser has no long-term interests in the foreign country.
E) It forces a franchiser to take out profits from one country to support competitive attacks in another.

Question

Quizplus · Accepted Answer

One of the disadvantages of franchising is that it is difficult to maintain quality control across distant foreign franchisees. This can lead to inconsistency in the brand's quality standards and may ultimately harm the franchiser's reputation. The other options are not necessarily disadvantages of franchising - A is a cost of expansion that the franchiser assumes regardless of the entry mode, B is not necessarily true for all service firms, D is not necessarily true, and E is not a disadvantage unique to franchising.

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