Description Case 5: Sonic is a successful franchise that offers an old-fashioned drive-in experienc ...
Description Case 5: Sonic is a successful franchise that offers an old-fashioned drive-in experience. What is Sonic’s competitive advantage over other fast-food franchises? What are the advantages of becoming a Sonic franchisee? What are the disadvantages of buying into the sonic franchise? You are an executive involved with Sonic’s franchise operations. Sonic franchisees have become increasingly popular. On the other hand, you have heard about some notable cases of misconduct at a few franchisees. You think making the franchise requirements more stringent and/or increasing the initial investment will help the company maintain additional control over its franchise operations and increase profit. Develop a list of requirements for opening up a new Sonic franchise that will be distributed to new entrepreneurs wanting to open up their own. Textbook: Ferrell, O., Hirt, G., & Ferrell, L. (2015). Business in a Changing World (10th ed.). New York: NY: McGraw-Hill Education. 1 attachments Slide 1 of 1 attachment_1 attachment_1 UNFORMATTED ATTACHMENT PREVIEW Sonic-A Successful Franchise with an Old-Fashioned Drive-In Experience For those who are nostalgic for the classic drive- franchisee's job is to ensure that each customer has the best in diner experience, the Sonic fast-food chain experience possible, thereby making repeat visits more likely. helps fill that need. Sonic offers customers a dose To accomplish this, a franchisee must build his or her locations, of nostalgia with its 1950s-style curbside speak- purchase equipment, hire excellent employees, make certain the ers and carhop service. As the United States' larg products live up to Sonic's reputation, maintain a clean, inviting est drive-in fast-food chain, Sonic offers a unique and diverse facility, and much more. In order to run 22 franchises, the entre- menu selection that helps set it apart from a highly competitive preneur runs his locations as limited partnerships, ensuring that fast-food franchise market. Founder Tray Smith launched the first a managing partner is on site at each location to keep day-to-day Sonic Drive-In (known then as Top Hat Drive-In) in Shawnee, operations running smoothly. Oklahoma, in 1953 as a sole proprietorship. He later added a part- Some of Sonic's success may be attributed to its stringent ner, Charlie Pappe, and eventually tumed the business into a requirements for selecting franchisees. Although franchisees franchise. must have excellent financial credentials and prior restaurant/ Despite its traditional feel, the company has seized upon entrepreneurial experience, the most important factor is that new trends and opportunities to secure more business. Cus- each franchisee fit into the Sonic culture. Sonic offers two types tomers at Sonic frequently eat in their cars or at tables out- of franchises. The traditional franchise, which includes the side the restaurant. However, Sonic has begun building indoor full restaurant set-up, requires a total investment of between dining prototypes in colder areas to test whether this will en $1.1 million and $3 million. Franchisees are required to pay tice more customers to eat at its locations. The prototype still 2 to 5 percent in ongoing royalty fees and a franchise fee of makes use of the restaurant's traditional patio but encloses it $45,000. A Sonic in a travel plaza, a mall food court, or a college to protect customers from the elements. So far, prototypes have campus are all examples of the nontraditional model. Because been set up in 10 locations. Each of these restaurants maintains these set-ups do not include the drive-in and carhop features, its carhop and drive-thru features in order to retain the "Sonic initial investment is less. However, royalty and advertising fees experience." still apply. Today, Sonic is a publicly traded company and ranks as For entrepreneurs looking for limited risk, franchises like the 10th largest fast-food franchise in terms of sales revenue. Sonic are great options. The advantages are abundant, as Franchising is an appealing option for entrepreneurs looking to discussed earlier. There is a high failure rate among small begin businesses without creating them from scratch. In the businesses. Entering into a successful franchise significantly case of Sonic, when a franchisee purchases a franchise, he or cuts down on the risk of failure, although a franchisee does she is getting a business that already has a national reputation have to watch for market saturation, poor location choice, and a national advertising campaign. The company also offers and other determining factors. However, there are also dis- its franchisees tremendous support and training. As a pioneer, advantages; chiefly, franchisees are often required to follow Troy Smith required to innovate; as a Sonic franchisee, one a strict model set the franchiser. For instance, in addition steps into an already proven system. to prior restaurant experience, Sonic requires its franchisees That being said, successfully running a franchise is not to be financially and operationally able to open two or more easy. One entrepreneur who owns 22 Sonic franchises says the drive-ins. These types of requirements may make it difficult 170 Part 2 Starting and Growing a Business for entrepreneurs who want to set their own terms. However, 2. What are the advantages of becoming a Sonic with Sonic's successful business model and brand equity, franchisee? there is no shortage of individuals who would like to operate 3. What are the disadvantages of buying into the Sonic a Sonic franchise franchise? Purchase answer to see full attachment Explanation & Answer: 1250 Words User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
