- A.Disputes between members of a distribution channel — vertical (manufacturer vs retailer), horizontal (retailer vs retailer), or multi-channel (online vs physical) — that disrupt distribution and require management.
- B.A contractual VMS in which the franchisor licenses its business model to franchisees who own and operate individual outlets — scales rapidly with franchisee capital. ✓
- C.Retailers classify by product breadth (specialty, department, supermarket), price-service mix (discount, off-price, full-price), and ownership (corporate chain, franchise, independent).
- D.A contractual VMS in which the franchisor licenses its business model to franchisees who own and operate individual outlets — scales rapidly with franchisee capital.
Franchising as a Distribution Strategy is a contractual VMS in which the franchisor licenses its business model to franchisees who own and operate individual outlets — scales rapidly with franchisee capital. The other options describe related but distinct concepts in Distribution & Place — see the deep-dive guide for the full distinction.
How to think about questions like this
Scales the brand without the franchisor financing every outlet. Questions like this test whether you can distinguish Franchising as a Distribution Strategy from neighboring concepts. The most common trap is choosing a closely-related concept that sounds similar but applies in a different context.
When you see a definition question on an exam, do two things: (1) translate the question into your own words, then (2) generate the answer in your own words before reading the options. This avoids the cognitive bias of recognizing a familiar phrase as correct just because it is familiar.