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

Meera Textiles, a successful single-city venture, wants to scale nationally with limited capital while keeping brand and quality control. Which route typically lets it expand with the least capital outlay by using partners' investment, while retaining brand standards through contract?

Franchising is the route. The franchisee invests in the outlet while the franchisor keeps control of brand and quality through the franchise agreement, so the firm expands nationally with minimal capital. Owned stores, cash acquisitions and backward integration all demand substantial own funding.

  1. AFranchisingCorrect
  2. BSetting up wholly owned stores in every city
  3. CAcquiring a listed competitor for cash
  4. DBackward integration into cotton farming

Explanation

In franchising the franchisee funds the outlet while the franchisor controls brand and standards by agreement, so capital need is low. Owned stores, cash acquisitions and backward integration all need heavy capital from the firm itself.

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