A well-known franchised food chain was brought to its knees when several customers got sick from tainted beef. Although the food chain recovered due to its quick and consistent action, several franchisees sued the parent company for loss of sales. The franchisees experienced the coattail effects of the bad publicity this event received.

Question

Quizplus · Accepted Answer

The coattail effect occurs when bad publicity affects one or more of the businesses associated with a franchise chain. The coattail effect can negatively impact growth and profitability.

A Well-Known Franchised Food Chain Was Brought to Its Knees