Christie is a business owner and wants to start a new franchise. She ultimately decides on a Taco Bell franchise because she can’t live without their nacho cheese chalupas, and she also thinks it would be a good addition to the mostly American food chains on Main St. The overhead costs for this particular franchise are expensive; but she likes the absentee ownership arrangement that Taco Bell has set up. So she decides to go forward with the Taco Bell franchise.
1. What are the differences among the three types of franchises? Were Christie to open a Taco Bell, what type of franchise would Christie be forming?
2. How is a franchise created? What type of information is typically included in a franchise agreement?
3. What are some of the things that Christie could do wrong at her Taco Bell franchise that could lead to possible termination? Suppose that Christie does not follow the guidelines for cleanliness and preparation of the product. Would this be a legitimate cause for Taco Bell to terminate the franchise?