Shootout in Texas: A Franchisee Caught in the Crossfire

Joyce A. Young, Indiana State University, Paul W. Clark, Coastal Carolina University, Paul Schikora, Indiana State University
December 31, 2018
North America
Marketing & Sales
3 pages
franchising, marketing channels, marketing strategy
Student Price: 
$4.00 (€3.27)
Average rating: 

This critical incident describes a business and legal dilemma faced by an executive of a franchised restaurant: Al Bhakta, had received word that his franchisor, Twin Restaurant Franchise, LLC, was immediately terminating the franchise agreement with Al’s company, Chalak TP Waco, LLC. The legal action, in response to a biker brawl yesterday outside of his Twin Peaks restaurant in Waco, Texas—a brawl which resulted in nine deaths—seemed premature at best. The franchisor’s sudden decision to terminate before all of the facts were known seemed outright unfair. Had the actions of his management staff actually violated the franchise agreement? The franchisor also insinuated that his Harker Heights Twin Peaks location and four future locations were in jeopardy as well. With millions of dollars already invested in the Twin Peaks restaurant concept, Al wanted to remain a franchisee. Yet, the police, the public, and the franchisor seemed to place most of the blame for the tragedy upon his restaurant rather than the bikers. Facing seemingly insurmountable odds, could he successfully fight the closure of his restaurant? Students are asked to decide what course of action Al Bhakta should take in response to the legal notice.

Learning Outcomes: 
  1. Discuss the nature of franchising and the expectations placed on a franchisee by a franchisor
  2. Analyze and critique how franchisors and franchisees dispute contractual obligations in a franchise agreement
  3. Identify and discuss the elements of an ethical dilemma

Application: This decision-based critical incident is appropriate for use in undergraduate courses in marketing channels, franchising, marketing strategy, and business law.