Comparison of starting up a non-franchise Ice Cream store or franchise company Dairy Queen
Dairy Queen
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Franchise holder rebellion issues facing Dairy Queen
There are many problems, which are affecting Dairy Queen, and this has created a rebellion towards it by its franchise holders. Dairy Queen is coming up with new regulations, which are making those, who have its franchise to suffer greatly. They are being forced to increase their table service and even the number of existing restaurants. If they do not comply with these new rules, they risk losing their franchise (Cohen, 2007). The result is that more than ten members of the Dairy Queen franchise are going to court to sue the company. This is an example of an organizational problem, which needs to be dealt with, as soon as possible if not, the repercussions will be expensive.
Some of the states that have complaints against Dairy Queen are Maryland, Missouri, Arizona, Kentucky, among others. They hope to stop the plans of Dairy Queen from pushing through. The law suit is causing a lot of problems to Dairy Queen, as well as to Berkshire Hathaway. The latter is owned by Warren Buffet an American billionaire. According to Chuck Mooty, the Chief Executive at Dairy Queen, the move is not meant to hurt any franchise holder. Dairy Queen has to find a way of ensuring that the rebellion does not exist (Mooty, 2011).
This problem is a concern for the management, because it will affect the companies’ outcome. The management should come up with ways to ensure that they solve the situation before it escalates further. Dairy Queen should ensure that it deals with its franchise holders on a personal basis, so that the situation is monitored (Macmillan, 2007). The management should come up with an effective marketing strategy to make sure that problems of a rebellious nature do not occur ever again. The problem exists because the franchise holders are being told to pay more than $275000 to improve their stores. This means that the franchise holders will incur more expenses, such as increasing the number of staff. Mooty believes that more advantages will come about due to the new rules, which are going to be implemented (Charleston, 2008). The management at Dairy Queen cannot understand why there is rebellion as the companies are not being forced into something new. This is because the franchise holders have to sign a contract. The contract specifies that they will have to add additional costs, which will expand their business (Schawnz, 2011).
Furthermore, the franchise holders are being influenced by associations of franchises. This is because they compete with Dairy Queen for supplying the franchise holder’s .The outcome is that Dairy Queen benefits more, thus the cause for their problems. The theory of marketing stipulates that businesses have to find a way of making sure that they are able to control different forces in the market (Kennon, 2010). Daisy Queen should make the franchise holders know that the additional costs will profit them in the long run. There is no need of taking the matter to court as it will only bring more problems. The lawsuit is expensive and Dairy Queen is sure to emerge the winner in this case. The contract at Dairy Queen for Franchise holders must be reviewed to ensure that they specify everything in detail (Niemela, 2009). This way, everything will be clear to those who intend to get into a contract with Dairy Queen. The Franchise situation at Dairy Queen will be solved through effective strategy implementation by management.
References
Charleston, W. (2008). Dairy Queen faces franchisee revolt. Food Inc. msnbc.com. Retrieved from HYPERLINK “http://www.msnbc.msn.com/id/23376156/ns/business-consumer_news/t/dairy-queen-faces-franchisee-revolt/” http://www.msnbc.msn.com/id/23376156/ns/business-consumer_news/t/dairy-queen-faces-franchisee-revolt/
Cohen, David. (2007). Doritos Queen – a dairy queen disaster. Idfive.com. Retrieved from HYPERLINK “http://www.attentionscan.com/2007/03/doritos-queen-dairy-queen-disaster.html” http://www.attentionscan.com/2007/03/doritos-queen-dairy-queen-disaster.html
Kennon, Joshua. (2010). The Dairy Queen Franchisee Revolt. Retrieved from HYPERLINK “http://www.joshuakennon.com/the-dairy-queen-franchisee-revolt/” http://www.joshuakennon.com/the-dairy-queen-franchisee-revolt/
Macmillan, Douglas. (2007). Franchise owners go to court. Bloomberg Business Week. Retrieved from HYPERLINK “http://www.businessweek.com/smallbiz/content/jan2007/sb20070129_887153_page_2.htm” http://www.businessweek.com/smallbiz/content/jan2007/sb20070129_887153_page_2.htm
Mooty. Chuck. Personal communication, August 16, 2011.
Niemela, Jennifer. (2009). DQ’s Q1 same-store sales up 5%”. Minneapolis/St. Paul Business Journal. Retrieved from HYPERLINK “http://www.bizjournals.com/twincities/stories/2009/04/13/daily18.html” http://www.bizjournals.com/twincities/stories/2009/04/13/daily18.html
Schawnz. Chris. personal communication, August 16, 2011
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