KFC, Taco Bell, Pizza Hut - Souring Franchisee Relationships*

Details

Mini Case Code : CLIM044
Publication date : 2005
Subject : International Marketing
Industry : Fast Food Companies
Length : 05 Pages
Price : Rs. 100

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Key words:

Franchising model, market share, franchisers, Kentucky Fried Chicken Corporation (KFC Corp), Taco Bell, Pizza Hut, restaurant chains, franchised outlets, Pepsi Co., Yum! Brands Inc., franchisees, subsidiaries, kiosks, standard frachise contract, health conscious customers, franchisee outlets, quality control, value-oriented menu, value-oriented strategy, overhead costs, non-traditional sites, scaled-down outlets

Note

* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 

Abstract:

The caselet highlights the franchiser-franchisee relationships of popular restaurant chains - KFC, Taco Bell, and Pizza Hut, owned by Yum! Brands. These fast food companies faced strained relationships with their respective franchisees. The caselet elaborates on how a variety of factors caused misunderstandings between the popular fast food companies and their respective franchisees.

Issues: » Is franchising always a better option to expand business operations? » Franchiser-franchisee relationship - a growing concern in franchising » The strained franchiser-franchisee relationship between KFC and its franchisees » The strained franchiser-franchisee relationship between Taco Bell and its franchisees » The strained franchiser-franchisee relationship between Pizza Hut and its franchisees Introduction Many companies have adopted the franchising model to expand their businesses in international markets.

Companies that decide to go in for franchising justify their decision by exhibiting statistical figures of low failure rates in franchising when compared to other modes of entering international markets.

Some companies even view franchising as the most lucrative way to capture a large market share with extremely low capital investment...

Questions for Discussion:

1. What are the reasons for the strained relationships between KFC and its franchisees? How do you think this could have been avoided?

2. What problems did the franchisees of Taco Bell face due to the strategies adopted by the franchisor?