*formerly posted on the BGSU MBA blog in 2009
Just received breaking news that there is a rift between the parent Burger King company and Burger King franchisees. The concern is over the $1 double cheeseburger, which franchise owners are saying costs more than $1 to produce. With this concern in mind, a number of franchisees have banded together and put together a lawsuit to sue the parent company.
This brings to light some major concerns about the fast food industry and franchising in general. Clearly, open communication is critical. This includes sharing cost structure information, as the parent company and the franchisees carry separate budgets. Competition with rivals in the industry (such as McDonald's and Wendy's) is integral to survival, but to what degree and at what cost? Is matching offerings and prices of discount menu items (typically called 'dollar menu' items or something of that sort) always practical?
Just received breaking news that there is a rift between the parent Burger King company and Burger King franchisees. The concern is over the $1 double cheeseburger, which franchise owners are saying costs more than $1 to produce. With this concern in mind, a number of franchisees have banded together and put together a lawsuit to sue the parent company.
This brings to light some major concerns about the fast food industry and franchising in general. Clearly, open communication is critical. This includes sharing cost structure information, as the parent company and the franchisees carry separate budgets. Competition with rivals in the industry (such as McDonald's and Wendy's) is integral to survival, but to what degree and at what cost? Is matching offerings and prices of discount menu items (typically called 'dollar menu' items or something of that sort) always practical?