Mike Bellobuono

Babson Professor Stephen Spinelli, Case Director

Andrea Alyse and Dan D'Heilly, Case Writers

Arthur M. Blank Center for Entrepreneurship

© Babson College, 1996.

Abstract

This is a classic case study of a student who is compelled to launch a career as an entrepreneur right out of college. Mike joined a one store bagel operation and helps grow it into a small chain of retail stores. They must decide whether to continue operating as a company-owned chain, or to grow through franchising when they receive a partnership offer from one of the most successful franchisors in the world, Fred DeLucca. Fred's most notable start-up was Subway, a large sandwich franchise. At the time of the case, Subway had received a lot of negative publicity concerning franchisee dissatisfaction.

The case explores the benefits and risks of using franchising as a growth mechanism and develops issues such as determining debt service capacity on a per-unit basis, franchisor team requirements, and creating a unique business format that can be successfully duplicated by franchisees yet difficult for competitors to copy. Additionally, the case explores the pros and cons of strategic alliances, and raises controversial ethical issues. This case is designed to be taught alone or in combination with Bagelz. This case is best used in courses with a focus on franchising, opportunity recognition, new ventures, career development, growth management, angel capital, and strategic partnerships.

Location of the company: Connecticut

Year(s) spanned by the case: 1991 through 1993

Industry segment(s): Franchising, fast-food

Stage of the company: Growth

Age of the entrepreneur(s): 20s

DVD

There is no DVD available for this case (but there is a DVD available for the Bagelz case). Please place video orders through the ecch.

Teaching Notes

A 11-page case teaching package, written by Steve Spinelli, is available for this case. The teaching package includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.