Fast Snacks is a food franchise that sells outlets to entrepreneurs interested in opening their own businesses. The business sells a variety of healthy snacks and drinks that can be prepared rapidly. It requires only a small, inexpensive location for the food preparation area and a sales counter. The franchisees are usually quite successful because of the strict rules set by the franchisor. Start-up costs are not as high as those of sandwich shops and small restaurants. Because the franchisor is very careful about who owns a Fast Snacks franchise in order to maintain a low failure rate, many applications are rejected.
1. Did Emi and Rosa make any mistakes in how they made their decision to select Fast Snacks? Give reasons for your answer. (With directions from your instructor, you may prefer to form groups of three to five students. Half the groups should argue that Emi and Rosa made the right decision, whereas the others should argue that they made the wrong decision. Each group should then provide reasons for the decisions.)
2. What advice would you give Rosa and Emi as they prepare to open their business to help them become successful and make adequate profits?
3. The franchisor of Fast Snacks is considering selling franchises in locations that are much nearer to each other in order to have more franchises. That might result in lower sales and profits for each franchisee, but higher franchise fees as well. What are the advantages and disadvantages of the current policy for new franchise locations?