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CMA Final · Entrepreneurship and Startup · Scalability, Scaling up and Stabilisation of Sustainable Business

A founder wants to scale by letting independent operators run outlets under her brand, using her operating manual and paying her a fee and royalty, while she keeps control of brand standards. Which scaling route is this?

This is franchising. Independent operators use the brand and operating system, paying fees and royalties, while the owner maintains standards. It allows rapid expansion with less of the founder's own capital, unlike integration, reverse mergers or stock options.

  1. AFranchisingCorrect
  2. BBackward vertical integration
  3. CReverse merger
  4. DEmployee stock option plan

Explanation

Franchising lets third parties operate under the brand and system in return for fees and royalties, enabling expansion with limited capital from the founder. The other options relate to supply chain ownership, listing, or employee compensation.

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