Question

Mondo Tacos, a fast food restaurant, operates through a business model in which individuals can buy the rights to set up Mondo Taco stores and sell the company's food in return for a lump sum fee at the beginning of the contract and a percentage of revenues every month. The owners of the stores have to offer a menu approved by the company's headquarters and also maintain consistent customer service as expected in its flagship store. Which of the following alternatives to integration does this best illustrate?

A) crowdsourcingB) credit rationingC) franchisingD) bootstrapping

Answer 1

The answer is: C) franchising

Step-by-step explanation:

A franchise is type of business that is owned and operated by a franchisee (an individual entity) which is branded and overseen by a franchisor (a larger company). E.g. Subway, Pizza Hut, etc.

When the franchisee opens his business, he will use the franchisor's business model and system, and most importantly, the franchisor's brand.