Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Enterprise growth Strategies

Question:

Read the passage given below to answer the questions :

A successful food entrepreneur today, Debashish Majumdar belonged to a lower middle class back ground, studied to become a banker. He got his first job as an office assistant. He rose from being an office assistant to the chief accountant and later on pursued a career as a banker with a good salary. After some time he quit his job and the first business he started in 2017, which was an ice cream shop. That did not take off and he made a loss of almost 10 lakh rupees. Idea to start a momo joint came to him when he visited an outlet in Guwahati and felt he could have served better momos. With a loan of about 23.5 lakh with an interest rate of 10 per cent, he launched 'Momomia' is 2018. He ensured that the location was prime to ensure good footfall. That also meant higher rent rate. He started operations with a team of three others. Eventually when he approached investors, he was told his operations were too small to be considered. Monthly sales in the first years were touching about Rs. 1.5 lakh, political turmoil in the state started. The pressure of returning the loan amount was also growing. Gradually situation become better, soon business picked up and in Feb. 2021, first franchise store was opened in Haridwar. Franchise model worked so well for him that he has opened up 55 such franchise outlets in Assam, Arunachal Pradesh, Bihar, Gujrat, Uttar Pradesh and Madhya Pradesh.

'Momomia' provides employment to over 200 people across 50+ outlets. Mean while Momomia's customers can choose from 100 difference kinds of momos.


Franchising type used by Debashish is most likely be :

Options:

Product franchise

Manufacturing franchise

Business franchise

Business format franchise

Correct Answer:

Manufacturing franchise

Explanation:

Product franchise business opportunity: Manufacturers use the product franchise to govern how a retailer distributes their products. The manufacturer grants a store owner the authority to distribute goods by the manufacturer and allows the owner to use the name and trademark owned by the manufacturer. The store owner must pay a fee or purchase a minimum inventory of stock in return for these rights. Some tire stores are good examples of this type of franchise.

Manufacturing franchise opportunity: These types of franchises provide an organization with the right to manufacture a product and sell it to the public, using the franchisor's name and trademark. This type of franchise is found most often in the food and beverage industry. Most bottlers of soft drinks receive a franchise from a company and must use its ingredients to produce, bottle and distribute the soft drinks.

Business franchise opportunity ventures: These ventures typically require that a business owner purchases and distributes the products for one specific company. The company must provide customers or accounts to the business owner, and in return, the business owner pays a fee or other consideration as compensation. Examples include vending machine routes and distributorships.

Business format franchise opportunity: This is the most popular form of franchising. In this approach, a company provides a business owner with a proven method for operating a business using the name and trademark of the company. The company usually provides a significant amount of assistance to the business owner in starting and managing the company. The business owner pays a fee or royalty in return. Typically, a company also requires the owner to purchase supplies from the company.