Marco is a franchisee with Daggies,a chain of sandwich shops.His business was doing well until several Daggies franchisees got in trouble and were forced to close their shops.Soon afterward,Marco's business deteriorated and he too was 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

The coattail effect refers to the negative impact on successful franchisees when other franchisees within the same chain fail or perform poorly. In this case, Marco's business was negatively affected by the closures of other Daggies franchisees.

Marco Is a Franchisee with Daggies,a Chain of Sandwich Shops