Zach is a franchisee with Digger's Doggies, a chain of hotdog shops. He was doing well until several other Digger's Doggies franchisees got in trouble and were forced to close their shops. Soon afterward, Zach's business declined and was also forced to close. This is an example of
A) an economic shakeout at work.
B) the coattail effect.
C) the law of diminishing returns.
D) management by exception.

Question

Quizplus · Accepted Answer

Coattail effects refer to situations where the actions of other franchisees can have an impact on the success or failure of a particular franchisee's business.

Zach Is a Franchisee with Digger's Doggies, a Chain of Hotdog