Center for Entrepreneurial Studies,
Babson College © 1996

ISBN 0-324-00171-1

Case Teaching Package
A case teaching package, written by Steve Spinelli, is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.

Length
This case is 22 pages in length and its case teaching package is 10 pages.

Video
There is a 23-minute video available for this case. It is a presentation to Babson MBA students by the case principal, Mike Bellobuono. (This is the same video listed in the Bagelz abstract.)

Abstract

This is a classic case study of a student who is compelled to launch a career as an entrepreneur right out of college. Mike joins a one store bagels operation and helps grow it into a small chain of retail stores. They must decide whether to continue operating as a company-owned chain, or to grow through franchising when they receive a partnership offer from one of the most successful franchisors in the world, Fred DeLucca. Fred's most notable start-up was Subway, a large sandwich franchise. At the time of the case, Subway had received a lot of negative publicity concerning franchisee dissatisfaction. The case explores the benefits and risks of using franchising as a growth mechanism and develops issues such as determining debt service capacity on a per-unit basis, franchisor team requirements, and creating a unique business format that can be successfully duplicated by franchisees yet difficult for competitors to copy. Additionally, the case explores the pros and cons of strategic alliances, and raises controversial ethical issues. Designed to be taught alone or in combination with Bagelz (B).

• Location of the company: Connecticut
• Years spanned by the case: 1991 through 1993
• Industry segment: Bagel franchising
• Stage of the company: Growth
• Age of the entrepreneurs: 20s