Filltum is 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. All new employees are given on-the-job training.' Filltum 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.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [2] Clear understanding: unique name of a product / business that distinguishes it from other businesses or products.
2. [1] Some understanding: e.g. makes a product 'standout'
3. [1] Lack of demand / recession
4. [1] Poor management skills / poor planning
5. [1] Change in tastes
6. [1] Financial problems e.g. lack of cashflow
7. [1] Change in legal controls
8. [1] Action of competitor
9. [1] Change in economic situation e.g. rise in interest rates, taxes
10. [2] Way 1: Workers are willing to offer good service in the restaurant
11. [2] Way 1: Workers willing to share ideas to help the expansion plans
12. [2] Way 1: Less likely to leave the franchise
13. [2] Way 1: Less absenteeism of chefs
14. [2] Way 2: Improved reputation in the 28 locations
15. [2] Way 2: Increase productivity / efficiency / fewer errors
16. [3] Advantage 1: Specific to the business needs in the 28 outlets so service standards are easier to maintain
17. [3] Advantage 1: Managers can control the skills taught
18. [3] Advantage 2: Lower cost than off the job lowering expenses at a time when business is looking to open 10 more restaurants
19. [3] Advantage 2: Employees still working while training so able to serve more food and output does not stop
20. [3] Advantage 2: Workers are learning on the equipment that they actually use
21. [3] Advantage 2: Managers can assess workers abilities
22. [1] Knowledge: identification of relevant issue(s)
23. [1] Application: relevant reference made to this business
24. [2] Analysis: relevant development of point(s)
25. [2] Evaluation: justified decision made as to whether selling more franchises in the best way for Filltum to expand
26. Franchises: Do not need to raise as much capital to expand as franchisee will pay a fee to buy the franchise
27. Franchises: Will receive a share of each franchise's profits providing an extra source of revenue
28. Franchises: Faster way to expand so able to maintain its fast rate of growth
29. Franchises: Mistakes by one franchisee may create a bad image for whole business damaging reputation and reducing sales revenue
30. Franchises: Will be expected to offer support and advice to these and other 16 franchises which can increase costs
31. Franchises: Can share risks with franchisee when many businesses are failing
32. Franchises: Brand / Customer awareness increases
33. Expand themselves: Able to keep control
34. Expand themselves: Keep all the profits made