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

Which scaling strategy involves allowing independent partners to use a startup's brand, business model and processes in return for fees or royalties, thereby expanding with limited capital from the startup itself?

The strategy is franchising. Independent partners use the startup's brand, model and processes and pay fees or royalties, so they supply the capital for new outlets. This lets the startup expand quickly with limited own investment, unlike integration, buybacks or liquidation.

  1. AFranchisingCorrect
  2. BBackward integration
  3. CLiquidation
  4. DShare buyback

Explanation

In franchising, the franchisee invests capital and operates under the brand and system, paying fees or royalties. This lets the franchisor expand quickly with limited own capital. Backward integration concerns acquiring suppliers, and buyback and liquidation do not expand operations.

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