Bagelz

Babson Professor Stephen Spinelli, Case Director

Andrea Alyse, Case Writer (with assistance from Dan D'Heilly)

Arthur M. Blank Center for Entrepreneurship

©Babson College, 1996.

Abstract

Bagelz is the sequel to the Mike Bellobuono case. Mike and his three partners owned Bagel Boys, a seven store Connecticut-based bagel chain. In 1993, Mike and his team were approached by Subway sandwich co-founder Fred DeLuca. Fred offered to partner with Bagel Boys and turn them into a franchised operation. The Bagel Boys team carefully considered the pros and cons of aligning with the sandwich giant—which had recently received some unfavorable publicity regarding their franchisor/franchisee relations—and eventually agreed to form a partnership. Aligning with Fred DeLuca and Peter Buck (Fred's Subway partner) offered Bagel Boys a high-growth vehicle—essential to compete against other industry players such as Bruegger's and Manhattan Bagel. But this raised new concerns because as the company expanded, the difficulty of maintaining uniform operating standards and likelihood of franchisee problems also increased. With the goal of rapid expansion, the team now needed to address a specific growth plan, including the way they selected franchisees, the company's internal management structure, and franchise support system.

This case can be used alone or in conjunction with the Mike Bellobuono case. It is best used in courses with a focus on franchising as a growth method, strategic alignment, franchisee selection criteria, franchisee/franchisor relations, systems innovations, financing requirements, optimal number of locations per trade area, process flow and the service delivery system, new product development, and competitive strategy.

Location of the company: Connecticut

Year(s)spanned by the case: 1993 through 1996

Industry segment(s): Franchising, fast-food

Stage of the company: Early growth

Age of the entrepreneur(s): 20s

DVD

There is a 22 minute DVD available for this case. Please place orders through ecch.

Teaching Notes

A 13-page case teaching package, written by Stephen Spinelli, is available for this case. The teaching package includes strategies for case presentation, key concepts, and suggestions for the most effective ways to work this case into a course.