Question

Refer to Mc-King Chicken. Which of the following would not be an advantage of a franchise?

a. He gains fast and well-controlled distribution.
b. He has more capital available to expand.
c. Outlets are maintained and operated according to a set plan.
d. He has the opportunity to start a business with limited capital.
e. Success will cause another outlet to be opened nearby.

Answer 1

Answer: e. Success will cause another outlet to be opened nearby.

Step-by-step explanation:

Another franchise opening does not depend on the success of Mc-King because this would imply that the funds from the successful outlet will be needed to open a new branch.

Franchises are opened with minimal capital from the side of the franchisor so the success of an outlet is not a factor in franchising. Even if he not making enough to start another outlet using his own funds, franchising will enable him to by using the funds of others.