Baseway is a multinational company that operates fast-food restaurants through franchises. The pie chart in Fig. 1 shows the ownership, in percentages, of fast-food restaurants in Country A. Privately owned restaurants 15% Baseway franchise restaurants 20% Other franchise restaurants 65% Total number of fast-food restaurants in Country A = 3500 [Figure 1] Use Fig. 1 to help you to answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2014). The mark or mark type is shown in brackets.

1. [2] 20/100 × 3500 (1 mark) = 700 (1 mark) OFR applies. Award full marks if the correct answer is given without working.
2. [1] One mark for • Will be able to recognise the restaurant from the outside • Customers will know what food to expect • Customers may know what prices to expect • Fast service • Can be found in many locations. Any other reasonable point.
3. [3] Any three points × 1 mark each and +1 for development – • Provides a well-known brand / name • Provides standardised accounting procedures • Supplies the products sold • May provide the site • May equip the premises • May provide training • May provide advertising • Offer advice and assistance • Offer promotions. Any other relevant point.
4. [4] Any two reasons explained × 2 marks each • Yes, it should because it is large enough to buy in bulk at discounted prices direct • It will have the logistical services to distribute to all its franchised restaurants • By not using the middleman, the wholesaler, it is cutting costs • It will have sufficient purchasing power to be able to negotiate with suppliers • May have better quality control. • No, it may have to buy some supplies through wholesalers who can supply in smaller quantities from a variety of suppliers; • It may need the wholesaler as back-up; • If manufacturers cannot supply. Any other relevant point.
5. [4] Any four points × 1 mark each and up to 2 marks for a well-developed point – • Many people all over the world want similar fast-food products which can be provided by very large companies • The standard of living has gone up in many parts of the world and people can afford to pay for their products • They have the resources to open and equip many restaurants in many countries • Improvements in communications have meant that they can keep in touch with their franchisees and can keep them supplied more easily • There is a demand by people wanting to start their own businesses for franchises in the fast-food sector; • Enables them to make profits. Any other relevant point.
6. [6] Level 2 (4-6 marks) Has discussed whether or not Baseway's activities are important to Country A and has given a reasoned opinion. (One-sided argument = 4 marks max) Baseway will give would-be entrepreneurs in the country opportunities to open their own businesses. Baseway will provide employment within Country A in its restaurants. The people who take up franchises or who work in the restaurants will have to be trained and this will make them more skilled and employable. These people will pay taxes to the country and so assist the economy. Baseway will probably buy from manufacturers based in Country A. This will provide income and business for another sector in the economy. Baseway's activities are likely to improve the standard of living in the country and change people's social habits. More people may be able to afford to go out to eat rather than eat at home. Baseway's activities, however, are likely to be profitable for the company. Although Baseway will pay taxes in Country A, much of their profits may be moved overseas for the benefit of Baseway. They are likely to bring in employees from other countries to manage the business in the country. If the business is not successful, Baseway could close down the franchises and end its connection with Country A. This is probably unlikely, given the nature of the business. What is more likely is that a franchise outlet in a particular area of the country may not be successful and close but others will open elsewhere. It may also bring unwelcome competition to other restaurants in the country. This may make them improve and offer better or other services. It may, however, force them to close as they cannot compete. On balance, Baseway's activities are likely to be important to Country A and benefit its economy. Level 1 (1-3 marks) Has commented on Baseway's activities in relation to Country A. Baseway will give people opportunities to start their own businesses. It will provide employment. It will offer training. It will raise the standard of living of people in the country. It may take money out of the country. This will be a disadvantage. It may provide competition to other restaurants.