Case analysis Study Example | Topics and Well Written Essays - 250 words - 5

Analysis - Case Study Example Using data gathered from Association of Convenience Stores, they tried to prove that the decision of a chain store to franchise is associated with the extent to which the stores are dispersed across different types of markets. Findings showed that chain stores are usually established in different environments and markets. This dispersion makes it difficult for the head office to monitor behavior of store personnel and to adapt to the needs of local customers. Evidences have showed dispersion increases delegation and provision of incentives to cope with the problem and that franchising is an easy way to expand into other markets. In contrast, a non-franchised store is operated in a decentralized system and provides more incentive pay. These findings are useful information to those who are thinking of expanding their operations. Take for example McDonalds, a known fast food chain whose franchisees complain of its too much controlling and passing on to them costs amid slow sales. Control is one of the problems in franchising as management does not see behaviors of its personnel. They only have to rely on second hand information. The growing discontent of franchisees apparently is due to strategies of McDonalds to spark sales that are slowing down due to competition. A classic example of problem of dispersion is the risk involved in choosing the correct personnel to manage chain. Ray Kroc, McDonalds owner took a great risk in getting a totally experienced man in managing a restaurant business. As a Biology teacher, Jerry practically knew nothing of the business. But probably, Krocs saw something in him that eventually, he gave three stores to him to manage for free, that of course, turned out to be profitable. These stores were already on the verge of losing. But when Jerry asked for more franchise store, he was already refused.(Miller, Kevin,2013).