diff --git a/examples/arm/run.sh b/examples/arm/run.sh
index 934b075be38..01699087443 100755
--- a/examples/arm/run.sh
+++ b/examples/arm/run.sh
@@ -36,6 +36,7 @@ system_config=""
 memory_mode=""
 et_build_root="${et_root_dir}/arm_test"
 ethos_u_scratch_dir=${script_dir}/ethos-u-scratch
+scratch_dir_set=false
 
 function help() {
     echo "Usage: $(basename $0) [options]"
@@ -81,7 +82,7 @@ for arg in "$@"; do
       --system_config=*) system_config="${arg#*=}";;
       --memory_mode=*) memory_mode="${arg#*=}";;
       --et_build_root=*) et_build_root="${arg#*=}";;
-      --scratch-dir=*) ethos_u_scratch_dir="${arg#*=}";;
+      --scratch-dir=*) ethos_u_scratch_dir="${arg#*=}" ; scratch_dir_set=true ;;
       *)
       ;;
     esac
@@ -113,25 +114,47 @@ then
     fi
 fi
 
-#######
-### Main
-#######
-# Source the tools
-# This should be prepared by the setup.sh
-[[ -f ${setup_path_script} ]] \
-    || { echo "Missing ${setup_path_script}. ${_setup_msg}"; exit 1; }
+function check_setup () {
+    # basic checks that setup.sh did everything needed before we get started
 
-source ${setup_path_script}
+    # check if setup_path_script was created, if so source it
+    if [[ -f ${setup_path_script} ]]; then
+        source $setup_path_script
+    else
+        echo "Could not find ${setup_path_script} file, ${_setup_msg}"
+        return 1
+    fi
+
+    # If setup_path_script was correct all these checks should now pass
+    hash arm-none-eabi-gcc \
+        || { echo "Could not find arm baremetal toolchain on PATH, ${_setup_msg}"; return 1; }
 
-# basic checks before we get started
-hash arm-none-eabi-gcc \
-    || { echo "Could not find arm baremetal toolchain on PATH, ${_setup_msg}"; exit 1; }
+    [[ -f ${toolchain_cmake} ]] \
+        || { echo "Could not find ${toolchain_cmake} file, ${_setup_msg}"; return 1; }
 
-[[ -f ${toolchain_cmake} ]] \
-    || { echo "Could not find ${toolchain_cmake} file, ${_setup_msg}"; exit 1; }
+    [[ -f ${et_root_dir}/CMakeLists.txt ]] \
+        || { echo "Executorch repo doesn't contain CMakeLists.txt file at root level"; return 1; }
 
-[[ -f ${et_root_dir}/CMakeLists.txt ]] \
-    || { echo "Executorch repo doesn't contain CMakeLists.txt file at root level"; exit 1; }
+    return 0
+}
+
+#######
+### Main
+#######
+if ! check_setup; then
+    if [ "$scratch_dir_set" = false ] ; then
+	# check setup failed, no scratchdir given as parameter. trying to run setup.sh
+	if ${script_dir}/setup.sh; then
+	    # and recheck setup. If this fails exit.
+	    if ! check_setup; then
+		exit 1
+	    fi
+	else
+	    # setup.sh failed, it should print why
+	    exit 1
+	fi
+    fi
+fi
 
 # Build executorch libraries
 cd $et_root_dir
diff --git a/examples/arm/setup.sh b/examples/arm/setup.sh
index 8d77eabce0f..2b78b90e18f 100755
--- a/examples/arm/setup.sh
+++ b/examples/arm/setup.sh
@@ -17,6 +17,9 @@ et_dir=$(realpath $script_dir/../..)
 ARCH="$(uname -m)"
 OS="$(uname -s)"
 
+# Figure out if setup.sh was called or sourced and save it into "is_script_sourced"
+(return 0 2>/dev/null) && is_script_sourced=1 || is_script_sourced=0
+
 if [[ "${ARCH}" == "x86_64" ]]; then
     # FVPs
     corstone300_url="https://developer.arm.com/-/media/Arm%20Developer%20Community/Downloads/OSS/FVP/Corstone-300/FVP_Corstone_SSE-300_11.22_20_Linux64.tgz?rev=018659bd574f4e7b95fa647e7836ccf4&hash=22A79103C6FA5FFA7AFF3BE0447F3FF9"
@@ -59,35 +62,45 @@ fi
 vela_repo_url="https://gitlab.arm.com/artificial-intelligence/ethos-u/ethos-u-vela"
 vela_rev="425541302c7e4b6fbeca7c0061286b131ee507c3"
 
-########
-### Optional user args
-########
-root_dir=${2:-"${script_dir}/ethos-u-scratch"}
-mkdir -p ${root_dir}
-root_dir=$(realpath ${root_dir})
-setup_path_script="${root_dir}/setup_path.sh"
-
-
 ########
 ### Functions
 ########
+function setup_root_dir() {
+    # Handle a different root_dir set by the user as argument to the
+    # script. This can only happen if the script is being executed and
+    # not sourced.
+    root_dir="${script_dir}/ethos-u-scratch"
+    if [[ $is_script_sourced -eq 0 ]]; then
+        root_dir=${2:-"${script_dir}/ethos-u-scratch"}
+    fi
+    mkdir -p ${root_dir}
+    root_dir=$(realpath ${root_dir})
+    setup_path_script="${root_dir}/setup_path.sh"
+}
 
-function setup_fvp() {
-
+function check_fvp_eula () {
     # Mandatory user arg --i-agree-to-the-contained-eula
     eula_acceptance="${1:-'.'}"
     eula_acceptance_by_variable="${ARM_FVP_INSTALL_I_AGREE_TO_THE_CONTAINED_EULA:-False}"
 
     if [[ "${eula_acceptance}" != "--i-agree-to-the-contained-eula" ]]; then
         if [[ ${eula_acceptance_by_variable} != "True" ]]; then
-        echo "Must pass first positional argument '--i-agree-to-the-contained-eula' to agree to EULA associated with downloading the FVP. Exiting!"
-        exit 1
+            echo "Must pass first positional argument '--i-agree-to-the-contained-eula' to agree to EULA associated with downloading the FVP."
+	    echo "Alternativly set environment variable ARM_FVP_INSTALL_I_AGREE_TO_THE_CONTAINED_EULA=True."
+	    echo "Exiting!"
+            exit 1
         else
-        echo "Arm EULA for FVP agreed to with ARM_FVP_INSTALL_I_AGREE_TO_THE_CONTAINED_EULA=True environment variable"
+            echo "Arm EULA for FVP agreed to with ARM_FVP_INSTALL_I_AGREE_TO_THE_CONTAINED_EULA=True environment variable"
         fi
     else
         shift; # drop this arg
     fi
+}
+
+function setup_fvp() {
+    # check EULA, forward argument
+    check_fvp_eula ${1:-'.'}
+
     if [[ "${OS}" != "Linux" ]]; then
         # Check if FVP is callable
         if command -v FVP_Corstone_SSE-300_Ethos-U55 &> /dev/null; then
@@ -181,14 +194,7 @@ function create_setup_path(){
     echo "hash FVP_Corstone_SSE-320" >> ${setup_path_script}
 }
 
-########
-### main
-########
-# Only run this if script is executed, not if it is sourced
-(return 0 2>/dev/null) && is_script_sourced=1 || is_script_sourced=0
-if [[ $is_script_sourced -eq 0 ]]
-    then
-    set -e
+function check_platform_support() {
     if [[ "${ARCH}" != "x86_64" ]] && [[ "${ARCH}" != "aarch64" ]] \
         && [[ "${ARCH}" != "arm64" ]]; then
         echo "[main] Error: only x86-64 & aarch64 architecture is supported for now!"
@@ -201,10 +207,23 @@ if [[ $is_script_sourced -eq 0 ]]
         echo "Supplied args: $*"
         exit 1
     fi
+}
+
+########
+### main
+########
+
+# script is not sourced! Lets run "main"
+if [[ $is_script_sourced -eq 0 ]]
+    then
+    set -e
+
+    check_platform_support
 
     cd "${script_dir}"
 
     # Setup the root dir
+    setup_root_dir
     cd "${root_dir}"
     echo "[main] Using root dir ${root_dir}"