Saturday, March 19, 2011

In “Fast Food Nation” Eric Schlosser writes about the concept of encroachment. Encroachment is when franchisor opens same chain nearby existing franchisee and cut downs the sales of existing franchise. In the book Schlosser has shown that franchisees were opposing to open the same china nearby which cut down their business. For instance, if there is only one grocery store in a curtain area, like village, the store has more customers and sales more. Most of the people come to buy their daily utensil. Customers buy items even if the prices of items are higher. They buy those items because they don’t have choice. They cannot find another store nearby. However, if another franchisor opens same chin near to that grocery store, the store sales decreases. Some customers start to go to new store. Sometimes new store gives more chipper than another does. New store tries to attract the customers showing chipper price than the other store has. When this goes on what will be the future of previously existing store? The store has to face several difficulties. It loses its customers as well as revenue.

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