Small & Medium business

managementInstructor: Sopheavy Ty

Student: Tran Thanh Thuy

24th of September, 2015

Case Study 10How can the owners of a franchise reverse decling sales??

Outline of the case

About Firehouse Subs

• A chain of submarine sandwich shops

• More than 400 locations

• 21 States Robin and Chris Sorenson

Outline of the case

Time Spent

Achi

evem

ents

Open the first restaurant

Expand to 300 locations in 17 states

Developing process of the Firehouse Subs

Grow to 30 restaurants & begin selling franchises to

expand business

1994 2001 Early 2008

Outline of the case

Outline of the case

Facing unexpected declining sales throughout its system caused by the recession in March 2008

Management’s Discussion Eliminate the 2% local advertising fee and allow franchisees to do their own marketing

Why the

sales decline even

worsen?

Management narrows the Puzzle to three options

Discussion

Advantages franchisees gain when they buy franchises ?

Disadvantages they experience?

Advantages franchisees gain when they buy franchises ?

Gaining access to a successful business system with strong brand name recognition

Low range of investment ($200k - $425k)

Standardized Quality of Food National Advertising Program Extensive Training Program

Disadvantages they experience?

Franchise Fees ($20K) and On-going Royalties (a royalty of 6% of sales & a 3% advertising fee)

Limited Freedom

Domino effect of sales declining in a recession

Discussion

Develop a list of Advantages & Disadvantages for each of the three options the managers are considering

Continue the existing local marketing by franchisees

Advantages Disadvantages

Reduce fees for franchisees

Franchisees have their own freedom and authority to

create and try new marketing

programs

Inconsistency among franchise

ownersNegative impact on the

brand from poor

management of some

FranchiseesWaste of time and money

Discount sandwich prices

Advantages Disadvantages

Attract low-income

customers improve sale

declining

Increase competition

ability

Narrow the already thin

profit margins decrease profit

In danger of damaging the reputation for

ingredient quality

Launch a new marketing campaign

You should spend more on advertising per

store and collect higher royalties and advertising fees (double to

4%)Like Subway

and Quiznos did

Experienced advertising companyFirehouse Manager

Launch a new marketing campaign

Advantages Disadvantages

Advises of an experienced advertising company

Proved by other sandwich chains

Increase in advertising expensesAdditional

pressure for franchisees to their existing struggles with

lower sales and profits

Discussion

Make recommendations to Firehouse Subs managers using one of three options. Explain.

Create a new marketing campaign

Proved by other sandwich stores

Objective and greater vision of the advertising expert

Better outcomes than Option 1 (continue current marketing) and Option 2 (discount)

Discussion

What should Firehouse Subs’ Unique selling Proposition (USP) be? What new key points if the managers decide to launch a new marketing campaign ?

USP and the key points

Reputation of quality

ingredients that

Firehouse Subs has

been using throughout 16 years

Special service style by featuring firefighting

theme

Questions?

Thank you for your attention