Case Study – Michelin Award Restaurant Going Franchising

The ScenarioAs a part of the Restaurant’s long-range marketing plan, you invested in the purchase of national propertylocations of the now-bankrupted “Sahara Desert Dish” franchise properties. Based on your Discussion andStrategic Plan results, you both agree that it’s time to go nationwide with the company’s patented dessertbrand, “Brain Freeze.” Examination of the company’s financial position, you now have a healthy portfolio ofinvestments, product revenue, and cash on hand.The Restaurant’s dessert menu has produced an exceptional revenue stream. These products can easily bemarketed as a standalone venture. The company portfolio includes the Sahara Desert Dish property purchasedin anticipation of this day. The properties are all in upscale locations that easily support the Restaurant’sthematic Desert menu.Looking Sally straight in the eye, you state, “It’s now or never, we need to get that Franchise Division going.”Sally was taken aback by the use of her statement, inquiries whether the operation will interfere with herentering the third Gold Star competition. You reply, “If Wolfgang Puck can open up gourmet pizza shops, that’sthe only incentive we need to startup our Desert franchise operation.” Sally fires back, “You’re the one studyingbusiness law! Why did it take you so long to bring it up?” Sally continues, “Start working on the documents, andI’ll get started on creating the franchise operations menu and food handling processes.”In your Discussion, you covered all of the eventualities companies face in expansion periods. The initialinvestment in the bankrupt properties has positioned the growth in a prime position. The commercial papersecuring the properties is almost paid off. Converting the properties into a new enterprise will reduce thecarrying cost and increase the current revenue streams by a minimum of 20%. Franchise Licensing Fees andproperty leasing rentals will initially bump revenue by approximately 35%.To start your review, first, research the requirements required to establish a legally recognized Franchiseoperation. Using the Strategic Business Plan and the other resources you now have, complete the Franchisefeasibility information and determine what steps are needed to enter this highly competitive area. Review theresources and respond to the Assignment.Your AssignmentAssignment: Feasibility of Franchise Expansion:In Assignment 9.3 you will collect data from your past assignments using the information to develop youroutline of franchise business information that you will need to complete the final project in Assignment 9.4. Tofully understand the nature of a Franchise operation review the SBA information, Forms 505, 506, and thencomplete the Questions in the Basic Franchise Document and the Chart in the Test for Feasibility Documentsbelow.Review Document 505 Form Drafting Guide and following the research outlining the required steps and issuesencountered in the development of the most important document in the relationship between the Franchisorand Franchisee, the Franchise Agreement. Document 505 establishes various litigation, state, and federalstatutory requirements in the establishment of a Franchise Agreement. Review each category listed using thelink and review material in the document. This information must be carefully reviewed to understand thestatutory and legal guidance required to complete the Franchise Agreement that you will edit in Assignment9.4.Review Document Form 506, lists the issues and available limits that should be considered when completingthe Checklist questions/answers you use to revise the draft agreement. The questions in 506, are stated, forexample as the question below.· Nature and extents of rights granted to franchisee.· — Duration of franchise period.· — Exclusiveness of franchise.· — Authorized use of a trademark.The question asks what is Nature (Type) is and the Extent (Range or scope) of the rights granted to yourfranchisee. This question seeks the limits on three grants to the franchisee, Duration, Exclusiveness, andAuthority. The Duration issue asks “what period,” (how long) will Franchisee be granted to exercise authority

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