Question

Which of the following is an advantage of licensing and franchising?

• A. There is a lower risk of takeovers or interventions by the foreign government.
• B. It enables international firms to produce goods on a large scale without investing in setting up production facilities.
• C. Manufacture and assembly of products can be done cheaply by outsourcing to countries where costs of production are low.
• D. There is minimal investment in foreign countries and hence the risk associated with foreign investments is also minimal.

Answer 1

The correct option is A

There is a lower risk of takeovers or interventions by the foreign government.

There is a lower risk of takeovers or interventions by the foreign government since the business is managed by a local franchisee.