Greg plans to open up three Hottie Pata′tee franchises in the greater Denver area. He just informed you that he plans to negotiate with the franchisor to eliminate the Big Potato Head that graces the roof of these restaurants. Greg is likely to learn that:
A)The parent company will give him a start-up cost break for the same amount that it would have to pay for three of these signs.
B) He is making a smart decision because it is not the sign that will bring customers to his potato bar. It is the wide-selection of toppings and six different ways he will cook potatoes.
C)It is non-negotiable due to company rules.
D)His failure rate will not increase or decrease because franchises traditionally have low failure rates.

Question

Quizplus · Accepted Answer

Franchisors often have strict rules and guidelines for their franchisees to follow, including branding and signage requirements. It is unlikely that the franchisor will negotiate on this issue, as it may compromise the consistency and recognition of their brand. Additionally, the start-up cost break mentioned in option A is unlikely, as the cost of the sign is likely outweighed by the benefits it provides in terms of brand recognition and marketing. Option B is partially true, as the quality of the product is important for attracting customers, but branding and signage also play a significant role in establishing brand recognition and attracting customers. Option D is also true, as franchises generally have a lower failure rate than independently owned businesses, but this does not directly relate to the issue of signage and branding.

Greg Plans to Open Up Three Hottie Pata′tee Franchises in the Greater