Firehouse Subs Case Study

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All franchise owners experience a challenging obstacle they must overcome while owning their own companies. Firehouse Subs opened in 1994 and fourteen years later, they experienced a 3.4% decline in sales throughout the entire chain. The direction of the company is ultimately decided by the CEO and the Executive Team of Firehouse Subs. In this article, the agency recommended Firehouse Subs to double its advertising fee to four percent. The advantages that franchisees gain when they buy their franchises include a business system, management training and support, brand name appeal, standardized quality of goods and services. Franchisees of Firehouse Subs have a complete business plan, strong brand name recognition, and the opportunity to own …show more content…

One is to continue the existing local marketing effort by franchisee, two is to begin discounting sandwich prices, and three is to launch a new marketing campaign. The advantages to continuing the existing local marketing effort by franchisees includes that the franchisees can continue to advertise their stores from their costs and not pay the three percent advertising fee. This creates freedom for the franchisee and allows them to make their own decision, even if it is for a chain restaurant. The disadvantages of this includes the decrease in sales continuing and becoming worst, as well as, the lack of consistency due to the different market strategies each franchisee uses. Since, Firehouse Subs’ sales continued to decline over an additional six months, they decided this was not the best option for the …show more content…

An advantage to this concept includes a larger customer market. This allows Firehouse Subs to implement a brand new mechanism to attract more customers, and to advertise different sandwich options. The disadvantage to this approach is the cost of launching a brand new marketing campaign. It is rather expensive to launch a brand new marketing campaign for a company.
According to the article, it was recommended that Firehouse Subs reclaimed the local advertising fee, as well as, double the fee to four percent. This would increase payments from each franchisee to Firehouse Subs from nine percent to eleven percent. The eleven percent of sales might be too high for some of the franchisees to

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