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Fred wanted a change after 30 years as a senior executive, hoping to semi-retire in his hometown of Indianapolis running his own business. He bought a car repair franchise, expanding to five locations over 7 years. However, the transition has been difficult, and Fred finds himself working 10+ hour days and feeling stressed. As a franchisee, Fred believed he would be his own boss running his own company, but now feels more like he is leasing a trademark from the franchisor, who dictates many business details and can take the franchise away for any small violation. Fred regrets not better understanding the business relationship prior to signing, and feels "captured" and unhappy in his current situation.

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Jia Wen 2
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79 views5 pages

Case Study Question

Fred wanted a change after 30 years as a senior executive, hoping to semi-retire in his hometown of Indianapolis running his own business. He bought a car repair franchise, expanding to five locations over 7 years. However, the transition has been difficult, and Fred finds himself working 10+ hour days and feeling stressed. As a franchisee, Fred believed he would be his own boss running his own company, but now feels more like he is leasing a trademark from the franchisor, who dictates many business details and can take the franchise away for any small violation. Fred regrets not better understanding the business relationship prior to signing, and feels "captured" and unhappy in his current situation.

Uploaded by

Jia Wen 2
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Case Study

Thought it Was Safer Than Starting His Own Business

After nearly thirty years of employment which ended as a senior executive in the automotive
parts industry, Fred wanted to make a change in his life pattern. To quote: "I was tired of
moving at such a fast pace and sick of traveling ten to twelve days a month." He wanted to go
back to his hometown of Indianapolis to pursue semiretirement and stay the rest of his years
there running a business.

When his former employer, a midsize firm in the automotive supply industry, was acquired
three years ago, Fred took the buyout funds and bought a car repair franchise in a close-in
suburb to Indianapolis. He expanded over the next seven years and now has five franchised
locations in the greater Indianapolis market. The last two businesses he financed primarily by
revenues generated from his first two car repair locations.

The transition from being a senior executive to a jack-of-all-trades franchised business owner
has been bumpy. Even with twenty-seven full-time employees (not counting himself and his
wife), Fred is putting in long hours and feels stressed on a daily basis. Though his businesses
are making money, Fred frequently works ten-hour days and spends evenings submerged in
paperwork. Fred sighs, "I'm supposed to be semiretired, but am working as hard if not harder
than ever before."

Fred's plight is not uncommon in the franchise world. Buying a franchise can ensnare would-
be , entrepreneurs that have a dream of independence and self-fulfillment by creating financial
exposure, headaches, and the stresses of business ownership—while someone else collects
royalties on every dime that comes through the door, not to mention advertising and other fees;
and all the while the franchisor dictates most every detail of what Fred can (and cannot) do,
including the types of signage to put up, how to price services and parts, how much overtime
to pay employees, and who will be his suppliers. As Fred states, "Violate the agreement, even
in some small way, and the franchisor can take the franchise back. Then, where would I be?
I'm stuck. I feel captured. I'm unhappy."

Fred believed that running a franchise business would mean being his own boss and running
his own company, which he now believes is a misconception. Fred believes that, in reality, his

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business venture of five service centers is more like leasing a trademark and the real boss is the
franchise system that sold him the privilege.

Case Questions

1. Is Fred ill-suited to be a franchisee, or, perhaps, did he just not understand what he was
getting into at the contract signing?
2. Could Fred's misconceptions be common among franchised business owners?
3. What could Fred have done prior to signing the contractual agreement to better inform
himself about the business relationship?
4. What should Fred do now, if anything?

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