There are several disadvantages of franchising as an entry mode. Which of the following is one of them?
A) There is little incentive for the franchisee to build a profitable operation as quickly as possible.
B) The firm incurs many of the costs and risks of opening a foreign market on its own.
C) Franchising may inhibit the firm's ability to use the profits obtained to open additional businesses in the same country.
D) Franchising may inhibit the firm's ability to take profits out of one country to support competitive attacks in another.

Question

Quizplus · Accepted Answer

There are several advantages of franchising as an entry mode. In particular, the firm is relieved of many of the costs and risks of opening a foreign market on its own. This creates a good incentive for the franchisee to build a profitable operation as quickly as possible. However, franchising may inhibit the firm's ability to take profits out of one country to support competitive attacks in another. Furthermore, quality control may become an issue if a franchisee does not maintain an appropriate quality level.

There Are Several Disadvantages of Franchising as an Entry Mode