Which of the following is an advantage of franchising?
A) A firm takes profits out of one country to support competitive attacks in another.
B) A firm is relieved of many of the costs and risks of opening a foreign market on its own.
C) It guarantees consistent product quality and achieves experience curve and location economies.
D) It improves the firm's ability to take profits out of one country to support competitive attacks in another.

Question

Quizplus · Accepted Answer

The advantages of franchising as an entry mode are very similar to those of licensing. The firm is relieved of many of the costs and risks of opening a foreign market on its own. Instead, the franchisee typically assumes those costs and risks. This creates a good incentive for the franchisee to build a profitable operation as quickly as possible.

Which of the Following Is an Advantage of Franchising