Shootout in Texas: A Franchisee Caught in the Crossfire
This critical incident describes a business and legal dilemma faced by an executive of a franchised restaurant. The franchisee had received word that the franchisor was immediately terminating the franchise agreement with his company. The legal action, in response to a brawl outside of his restaurant which resulted in several deaths, seemed premature. The franchisor’s sudden decision to terminate before all of the facts were known seemed unfair. Had the actions of his management staff actually violated the franchise agreement? The franchisor also insinuated that his other location and four future locations were in jeopardy. With millions of dollars already invested in the restaurant concept, he wanted to remain a franchisee. Facing seemingly insurmountable odds, could the franchisee successfully fight the closure of his restaurant? Students are asked to decide what course of action the franchisee should take in response to the legal action.
- Discuss the nature of franchising and the expectations placed on a franchisee by a franchisor
- Analyze and critique how franchisors and franchisees dispute contractual obligations in a franchise agreement
- 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.