Which of the following statements is a disadvantage of franchising?
A) The retailer bears all the loss.
B) Heavy taxes are levied on the retailer.
C) Local laws favor the franchise.
D) The potential profit is reduced.
E) This is the most expensive method of entering a new market.

Question

Quizplus · Accepted Answer

Franchising offers the lowest risk and requires the least investment but also has the lowest potential return on investment. The retailer has limited control over the retail operations in the foreign country, its potential profit is reduced, and the risk of assisting in the creation of a local domestic competitor increases.

Which of the Following Statements Is a Disadvantage of Franchising