Question

Domestic firms developing a global entry strategy might consider franchising; however, the disadvantages need to be considered. Which of these is NOT a disadvantage of franchising? A. The franchisor has limited ability to ensure that foreign operations follow all the concepts and ideas that made the firm successful domestically.B. The franchisor might end up becoming a competitor.C. Franchising limits profit potential, since profits will have to be split with the franchisee.D.Franchising is the riskiest way to enter a foreign market.E. All of these are disadvantages a firm must consider

Answer 1

Franchising is the riskiest way to enter a foreign market is NOT a disadvantage of franchising.

Explanation:

Franchising is based on a business model that a company should embrace as a growth technique. A franchiser licenses its know-how, its processes, its intellectual property, the execution of its business model, its brand name and its right to sell its branded products and items to a franchisee.

A franchise is a business whose owners or ' property owners ' transfer their company branding rights to a third-party retail store, called ' franchisees, ' which belong to independent third-party operators. Franchises are a very common business practice.

Disadvantages :

• The purchase of a franchise means a formal agreement with your franchisor.
• Franchise agreements tell you how you run the business, so creativity can be little space.
• Usually there are limitations on the location, the products that you sell and the suppliers you use.