Marketing Channels 8th Edition by Bert Rosenbloom

Exercise 1

Snap-on Tools is the franchisor for a unique business format franchise that uses franchisees in mobile vans to sell high quality tools and equipment to professional mechanics. The franchisees bring the tools and equipment to the mechanics at their worksites so that the mechanics do not lose time shopping for tools. One of the features of the business format is Snap-on prescribing the level and variety of inventory to be carried by the franchisees. Snap-on argues that it has the knowledge and experience needed to assure that each franchisee has the optimum inventory mix. Many of the franchisees, however, claim that the territories they serve are diverse and have different customer needs. So they can become loaded down with inventory that they cannot sell if they rely on Snap-on to specify their inventories. This dispute over the control of franchisee inventory has created a conflict that resulted in some franchisees launching lawsuits against the franchisor.
Discuss the issue of inventory determination from the franchisor's and the franchisee's points of view. Do you think that specifying the franchisees' inventory mix is a crucial component of the business format?