Question

Jamal purchased a Subway franchise in a great location across the street from an outlet mall. After two years in business, Jamal felt that he would like to offer his customers more products to choose from. He expanded his Subway business to include ice cream and a small smoke shop specializing in cigars. This product line expansion was very successful. As a result, profits went up and customers loved the new options. One day Jamal received a visit from the Subway franchisor who was shocked to see the product line expansion. This resulted in the Subway franchisor giving Jamal 30 days to restore his Subway business to the terms of the franchise agreement contract which limits the product line to only Subway products. Using the model below, help Jamal get back into compliance with the Subway franchise agreement. Define the problem Explain the cause (or causes) of the problem. Explain the effects the problem has had on the company. Provide a solution (or solutions) to the problem.

Answer 1

The correct answer to this open question is the following.

Although the question is incomplete because it does not attach the model to answer it we can comment on the following.

The problem is that Jamal, trying to increase profits, decided to sell two different products that are not part of the Subway products. When the franchisor visited Jamal's location, it realized the changes and set an ultimatum to Jamal to respect the franchise agreement.

The cause of the problem is that although Jamal wanted to diversify the products to have more income, this contradicts and is against the franchise agreement he signed when he bought the Subway franchise. The contract clearly states that the owner of the franchise can only sell products authorized in the contract by Subway. That is exactly one of the characteristics of a franchise. That you visit one of them any place in the world, and you are going to find de the same products with the same quality. That is the product guarantee of a franchise like Subway.

So the effects for the company are that its reputation an image can be questioned for selling different products that are hot approved by Subway. It is a major risk the company is not going to allow. Furthermore, it is stated in the contract. So Jamal has no right to break it.

One possible solution is that Jamal respects those 30 days to make the proper corrections, follow the guidelines established in the Subway's manuals, offer a sincere apology, and commit himself to operate the franchise just as it is stated on the agreement.