The most significant disadvantage to franchising as a means of acquiring a business is
A) the amount of paperwork.
B) the absence of economies of scale.
C) high start-up costs.
D) government regulation.
E) low break-even points.

Question

Quizplus · Accepted Answer

Franchising often requires high start-up costs, including fees, initial inventory, and the cost of building or renovating a facility to meet franchisor standards. These costs can be significant and may require substantial investment or financing, making franchising a potentially risky venture. Additionally, ongoing royalty fees, marketing expenses, and other costs can also add up over time, further increasing the cost of franchising.

The Most Significant Disadvantage to Franchising as a Means of Acquiring