Students the instructions for the Capstone Project are outlined below:

You will answer the questions below in a paper.

1. Question - Identify the problem in the case study

2.. Question- Frame the problem- explain and describe the context of the problem.

3.. Question- Develop three solutions to the problem.

a. Eliminate two solutions explain why they were eliminated and why you chose the other.

b. Develop the solution that was chosen.

Pizza Experts from St. John's on the Westcoast of Newfoundland. The most recent franchise opened on Water Street in the downtown district of St. John's, in June 1989. After four years, Rob and Wayne's company had expanded rapidly from a single outlet to a $5 million operation comprised of six restaurants. Rob believed Pizza Experts had become the most popular pizza company in Newfoundland. On an average Friday night, the St. John's outlets alone handled more than 1,000 telephone requests for pizza delivery. The Franchise Arrangement As part of the franchise application process, potential owners of Pizza Experts outlets had to submit a Pizza Experts franchise application to Rob and Wayne Moore (Exhibit 1); they were also required to agree to credit and personal reference checks. Furthermore, potential franchise owners were usually required to have $150,000 dollars personal net worth in order to merit an interview. Potential franchisees were permitted to evaluate an income projection and Pizza Experts Proven Recipe of Success (Exhibits 2 and 3). The income projection was not an income guarantee; it did, however, give the future owner an idea of expected revenue and costs. It was also imperative that the franchisee put many hours and a lot of additional resources into creating a successful restaurant The Pizza Experts initial franchise fee of $25,000, and royalty fee of 4% of annual gross eamings were somewhat less expensive than those of competitors (Exhibit 4). Rob felt it was necessary for the franchisee to have a minimum of $50,000 cash to cover equipment purchases and leasehold improvements. Previous experience had shown thata $ 10,000 operating line of credit would be necessary to cover working capital needs. The initial franchise term was ten years, with an option to renew for another ten years. Franchise fees would be renegotiated upon renewal. As part of the franchise agreement, ingredients for all outlets were ordered from one supplier to standardize quality. They were packaged with the Pizza Experts logo and sold to the franchise outlets. "Dough is the pizza; anyone can sprinkle on the toppings," claimed Rob. The Moore brothers had spent years experimenting to develop the best possible crust and did not want franchisees to use anything else. Rob substantiated his belief in the importance of the dough/crust by citing a 1987 study conducted by M-5 Advertising. The St. John's market research company identified taste as a positive factor for 42% of those who had eaten at Pizza Experts A close, friendly atmosphere in an efficiently run business was encouraged at all locations, and closely monitored by Rob and Wayne. In fact, franchise owners adhered to a regular reporting schedule. Wayne, who was in charge of finance, received daily, weekly, and monthly sales data from each franchisee. In addition, each franchisee had to produce audited annual financial statements. If there were any problems with operations, the franchise owners had to answer to the Moore brothers directly. One franchisee had already been replaced because of poor management skills and his refusal to take the brothers' management advice to improve performance. The Moore brothers did this reluctantly; they believed in providing management advice to franchisees not only in start-up, but for the duration of the franchise agreement Having exhausted all options to improve performance in the affected outlet, Rob and Wayne had no choice but to end the franchise relationship because of its potential negative impact on the Pizza Experts family. As further support and protection for franchisees, Rob and Wayne provided territory protection. To accomplish this, the city was divided into five zones with population blocks of 25,000 people (Exhibit 5). Zone protection guaranteed that only one store would be built in each zone. Therefore, future restaurants would be situated properly around the city thus reducing "cannibalisation" of established outlets' markets. This zoning also ensured quick pizza delivery during the busy weekend nights. Each outlet was allotted a particular zone so that delivery service would be efficient and the possibility of one store becoming swamped with orders would be minimized. To emphasize this concept, a new marketing slogan was also introduced: "You are now entering the Pizza Experts Zone." The Moores knew the zoning had proven successful, since 80% of Pizza Experts takeout customers stated location as their main reason for selecting the company when surveyed in the 1987 study by M-5 Advertising, Pizza Experts also used a centralized computer system for take-out orders. The orders were sent to the appropriate zone and the franchises were billed for their proportional use of the telephone and computer system used in delivery operations. Pizza Experts Once a Pizza Experts franchise was operational, the outlet had to take part in a co-operative advertising program supported by 3% of annual gross sales. This program helped ensure growth of the company, positive exposure for new outlets, and continuation of the existing consumer advertising program. To give the restaurants continued visibility, the co-operative advertising program utilized four media: radio, television, newspaper, and direct mail. The franchise owners met monthly with Rob and Wayne to discuss the merits of proposed advertising programs. No new sales promotional activities were adopted unless a majority of the franchisees agreed to the new concept. Since Pizza Experts catered to pizza lovers between the ages of 18 and 40, a theme of fun and entertainment was emphasized. Charlie Chaplin, used on the Pizza Experts logo to symbolize relaxation and enjoyment, reinforced this theme. As well, one unique advertising medium, a St. John's Transportation Commission bus, used the Charlie Chaplin symbol, and reminded pizza lovers of the delivery guarantee and Pizza Experts phone number ("double one-double 011). The Franchisees All Pizza Experts established franchise owners had many of the qualities the Moores looked for in a franchisee. From experience, Rob knew the importance of a franchisee's reputation. "If an owner is not well liked, that owner is not going to be supported by the community." Since Rob viewed St. John's as a conservative centre, with thirty-three pizza shops in the greater metropolitan area, he believed the importance of a favourable public image and an outgoing personality could not be minimized. Rob also stressed the importance of dedication. Owners had to focus all their efforts on the restaurant. Ambition and quality were not enough. Other desirable characteristics were sound financial backing, business sense, experience, and education. Although there was no ranking system for these characteristics, all applications were measured using a plus/minus rating. The financial background and favourable exposure in the community were weighted fairly heavily. The Moores preferred "business marriages," where individuals with experience in the restaurant business would team up with people having sufficient capital to start a franchise. Rob and Wayne were impressed by the number of individuals interested in learning more about the Pizza Experts franchise concept. Applications arrived regularly from potential franchisees. In the most recent screening, Rob and Wayne identified Joe Hillier and Harold Baker as the best candidates for further consideration. Potential Franchisees' Background Having completed the application form, Joe and Harold believed they had many of the qualities the Moore brothers seemed to be looking for in their franchisees. Joe had a Master of Business Administration (MBA) from Dalhousie University in Halifax, Nova Scotia. During his academic studies he had been employed as an assistant manager for an independent pizza outlet, and for the past twenty three years he had owned and operated an income tax service in Comer Brook. Joe had a lot of practical experience but his references indicated that he was not receptive to new ideas and change. He came from a well-respected, wealthy family in the Comer Brook area. Over the years Joe had managed to save $100,000 for a new business venture, and his family was prepared to provide another $20,000 if required. Harold had received his high school diploma from Brother Rice High School in St. John's and usiness diploma from the Newfoundland Career Academy, a private college. While at the Academy, Harold studied Business Administration, a one-year course with a primary focus on accounting and computer training Course work, however, also included entrepreneurship, different forms of Canadian business, communication, and supervisory skills. Harold was an enthusiastic individual with a well-rounded business background, despite having declared bankruptcy in his previous venture. Undaunted by the bankruptcy, Harold had no difficulty quickly finding employment. In fact, he was immediately employed as a marketing manager with a major oil company in St. John's. His references highlighted his ability to produce excellent marketing promotions, but commented negatively on his brash mannerisms. With their combined skills, Joe and Harold were confident they could open and successfully run Pizza Experts' next franchise in St. John's The men were looking forward to meeting Rob and Wayne and finding out more about the franchise agreement Pizza Experts from St. John's on the Westcoast of Newfoundland. The most recent franchise opened on Water Street in the downtown district of St. John's, in June 1989. After four years, Rob and Wayne's company had expanded rapidly from a single outlet to a $5 million operation comprised of six restaurants. Rob believed Pizza Experts had become the most popular pizza company in Newfoundland. On an average Friday night, the St. John's outlets alone handled more than 1,000 telephone requests for pizza delivery. The Franchise Arrangement As part of the franchise application process, potential owners of Pizza Experts outlets had to submit a Pizza Experts franchise application to Rob and Wayne Moore (Exhibit 1); they were also required to agree to credit and personal reference checks. Furthermore, potential franchise owners were usually required to have $150,000 dollars personal net worth in order to merit an interview. Potential franchisees were permitted to evaluate an income projection and Pizza Experts Proven Recipe of Success (Exhibits 2 and 3). The income projection was not an income guarantee; it did, however, give the future owner an idea of expected revenue and costs. It was also imperative that the franchisee put many hours and a lot of additional resources into creating a successful restaurant The Pizza Experts initial franchise fee of $25,000, and royalty fee of 4% of annual gross eamings were somewhat less expensive than those of competitors (Exhibit 4). Rob felt it was necessary for the franchisee to have a minimum of $50,000 cash to cover equipment purchases and leasehold improvements. Previous experience had shown thata $ 10,000 operating line of credit would be necessary to cover working capital needs. The initial franchise term was ten years, with an option to renew for another ten years. Franchise fees would be renegotiated upon renewal. As part of the franchise agreement, ingredients for all outlets were ordered from one supplier to standardize quality. They were packaged with the Pizza Experts logo and sold to the franchise outlets. "Dough is the pizza; anyone can sprinkle on the toppings," claimed Rob. The Moore brothers had spent years experimenting to develop the best possible crust and did not want franchisees to use anything else. Rob substantiated his belief in the importance of the dough/crust by citing a 1987 study conducted by M-5 Advertising. The St. John's market research company identified taste as a positive factor for 42% of those who had eaten at Pizza Experts A close, friendly atmosphere in an efficiently run business was encouraged at all locations, and closely monitored by Rob and Wayne. In fact, franchise owners adhered to a regular reporting schedule. Wayne, who was in charge of finance, received daily, weekly, and monthly sales data from each franchisee. In addition, each franchisee had to produce audited annual financial statements. If there were any problems with operations, the franchise owners had to answer to the Moore brothers directly. One franchisee had already been replaced because of poor management skills and his refusal to take the brothers' management advice to improve performance. The Moore brothers did this reluctantly; they believed in providing management advice to franchisees not only in start-up, but for the duration of the franchise agreement Having exhausted all options to improve performance in the affected outlet, Rob and Wayne had no choice but to end the franchise relationship because of its potential negative impact on the Pizza Experts family. As further support and protection for franchisees, Rob and Wayne provided territory protection. To accomplish this, the city was divided into five zones with population blocks of 25,000 people (Exhibit 5). Zone protection guaranteed that only one store would be built in each zone. Therefore, future restaurants would be situated properly around the city thus reducing "cannibalisation" of established outlets' markets. This zoning also ensured quick pizza delivery during the busy weekend nights. Each outlet was allotted a particular zone so that delivery service would be efficient and the possibility of one store becoming swamped with orders would be minimized. To emphasize this concept, a new marketing slogan was also introduced: "You are now entering the Pizza Experts Zone." The Moores knew the zoning had proven successful, since 80% of Pizza Experts takeout customers stated location as their main reason for selecting the company when surveyed in the 1987 study by M-5 Advertising, Pizza Experts also used a centralized computer system for take-out orders. The orders were sent to the appropriate zone and the franchises were billed for their proportional use of the telephone and computer system used in delivery operations. Pizza Experts Once a Pizza Experts franchise was operational, the outlet had to take part in a co-operative advertising program supported by 3% of annual gross sales. This program helped ensure growth of the company, positive exposure for new outlets, and continuation of the existing consumer advertising program. To give the restaurants continued visibility, the co-operative advertising program utilized four media: radio, television, newspaper, and direct mail. The franchise owners met monthly with Rob and Wayne to discuss the merits of proposed advertising programs. No new sales promotional activities were adopted unless a majority of the franchisees agreed to the new concept. Since Pizza Experts catered to pizza lovers between the ages of 18 and 40, a theme of fun and entertainment was emphasized. Charlie Chaplin, used on the Pizza Experts logo to symbolize relaxation and enjoyment, reinforced this theme. As well, one unique advertising medium, a St. John's Transportation Commission bus, used the Charlie Chaplin symbol, and reminded pizza lovers of the delivery guarantee and Pizza Experts phone number ("double one-double 011). The Franchisees All Pizza Experts established franchise owners had many of the qualities the Moores looked for in a franchisee. From experience, Rob knew the importance of a franchisee's reputation. "If an owner is not well liked, that owner is not going to be supported by the community." Since Rob viewed St. John's as a conservative centre, with thirty-three pizza shops in the greater metropolitan area, he believed the importance of a favourable public image and an outgoing personality could not be minimized. Rob also stressed the importance of dedication. Owners had to focus all their efforts on the restaurant. Ambition and quality were not enough. Other desirable characteristics were sound financial backing, business sense, experience, and education. Although there was no ranking system for these characteristics, all applications were measured using a plus/minus rating. The financial background and favourable exposure in the community were weighted fairly heavily. The Moores preferred "business marriages," where individuals with experience in the restaurant business would team up with people having sufficient capital to start a franchise. Rob and Wayne were impressed by the number of individuals interested in learning more about the Pizza Experts franchise concept. Applications arrived regularly from potential franchisees. In the most recent screening, Rob and Wayne identified Joe Hillier and Harold Baker as the best candidates for further consideration. Potential Franchisees' Background Having completed the application form, Joe and Harold believed they had many of the qualities the Moore brothers seemed to be looking for in their franchisees. Joe had a Master of Business Administration (MBA) from Dalhousie University in Halifax, Nova Scotia. During his academic studies he had been employed as an assistant manager for an independent pizza outlet, and for the past twenty three years he had owned and operated an income tax service in Comer Brook. Joe had a lot of practical experience but his references indicated that he was not receptive to new ideas and change. He came from a well-respected, wealthy family in the Comer Brook area. Over the years Joe had managed to save $100,000 for a new business venture, and his family was prepared to provide another $20,000 if required. Harold had received his high school diploma from Brother Rice High School in St. John's and usiness diploma from the Newfoundland Career Academy, a private college. While at the Academy, Harold studied Business Administration, a one-year course with a primary focus on accounting and computer training Course work, however, also included entrepreneurship, different forms of Canadian business, communication, and supervisory skills. Harold was an enthusiastic individual with a well-rounded business background, despite having declared bankruptcy in his previous venture. Undaunted by the bankruptcy, Harold had no difficulty quickly finding employment. In fact, he was immediately employed as a marketing manager with a major oil company in St. John's. His references highlighted his ability to produce excellent marketing promotions, but commented negatively on his brash mannerisms. With their combined skills, Joe and Harold were confident they could open and successfully run Pizza Experts' next franchise in St. John's The men were looking forward to meeting Rob and Wayne and finding out more about the franchise agreement