Fundamentals of Management 7th Edition by Ricky Griffin

Exercise 3

Negotiating a Franchise Agreement
Step 1: Assume that you are the owner of a rapidly growing restaurant chain. To continue your current level of growth, you are considering the option of selling franchises for new restaurants. Working alone, outline the major points of most concern to you that you would want to have in a franchising agreement. Also note the characteristics you would look for in potential franchisees.
Step 2: Assume that you are an individual investor looking to buy a franchise in a rapidly growing restaurant chain. Again working alone, outline the major factors that might determine which franchise you elect to buy. Also note the characteristics you would look for in a potential franchiser.
Step 3: Now form small groups of four. Randomly select one member of the group to play the role of the franchiser; the other three members will play the roles of potential franchisees. Role-play a negotiation meeting. The franchiser should stick as closely as possible to the major points developed in Step 1. Similarly, the potential franchisees should try to adhere to the points they developed in Step 2.
Follow-up Questions:
Can a franchising agreement be so one-sided as to damage the interests of both parties? How so?