Question

The brand name for a chain of vegetarian restaurants. It has 28 restaurants, 16 of which are operated by franchisees. The Managing Director is pleased with its fast rate of growth at a time when many businesses are failing. She said: Having a well-motivated workforce is important to our success. New employees are given on-the-job training. Plans to have 10 more restaurants in the next year. The Managing Director has to decide whether to sell additional franchises or open its own restaurants. (e) Do you think selling more franchises is the best way for Filltum to expand? Justify your answer.

Answer 1

The decision of whether to sell additional franchises or open its own restaurants for expansion depends on various factors. Selling more franchises can be a good way for Filltum to expand as it allows the company to leverage the resources and capital of the franchisees while expanding its brand presence. On the other hand, opening its own restaurants can provide Filltum with more control over the quality and consistency of its brand.

Step-by-step explanation:

The decision of whether to sell additional franchises or open its own restaurants for expansion depends on various factors.

Selling more franchises can be a good way for Filltum to expand as it allows the company to leverage the resources and capital of the franchisees while expanding its brand presence. Franchisees are responsible for the costs of setting up and operating the restaurants, relieving some financial burden on Filltum. Moreover, franchisees are motivated to succeed as they have invested their own money into the business.

On the other hand, opening its own restaurants can provide Filltum with more control over the quality and consistency of its brand. It allows the company to maintain direct management and ensure that its standards are upheld. However, this approach may require significant upfront investment from Filltum and the company would bear all the costs and risks associated with the new restaurants.

Ultimately, the decision should be based on an assessment of the company's financial resources, growth goals, and ability to effectively manage and support franchisees or its own restaurants.