Franchise or Independent?
In 2003, Rusty and Beth Adcock opened up the fourth franchised unit of Country Fisherman, a small, Mississippi-based, family-owned restaurant group. Rusty and Beth were switching gears from the corporate worlds of electrical wholesale distribution and retail marketing. Obviously there would be a learning curve.
They had looked at several business opportunities and decided on the restaurant business because it was a cash-basis business. There was not going to be a lot of money tied up in inventory and there would be minimal to no accounts receivables. This would bode well for cash flow.
The Country Fisherman Restaurant originated in 1987 in Prentiss, a small town in south central Mississippi. Peggy Tuma started it and built it with hard work and a deep background in food preparation. By the time her new husband Harold came along in the early 1990s, Peggy had worked out enough kinks that Harold encouraged and assisted her in expanding. Gradually they expanded into two other marketsMendenhall and Jackson, Mississippi. It was at this time they realized the need to formulate franchise agreements.
When the Adcocks and Tumas worked out their deal with the Brookhaven franchise, it was the first franchise agreement sold subsequent to the restaurant being established. At the time, the Tumas had initially owned all of the first three restaurants. Later they sold the Mendenhall unit to a relative. So, basically, the deal being done with the Adcocks was the first independently run unit the Tumas would be selling.
While the Tumas had created a franchise model for their enterprise, the Adcocks were in charge of their own destiny. The Tumas provided simple menu plans, inventory guidelines, and volume pricing contracts with their franchise agreement. During the first week or two after opening the Brookhaven unit, the Tumas did help with hands-on assistance to make sure the unit got under way as the others they had opened. However, once the wheels were in motion, the Adcocks were virtually on their own. The Tumas would provide answers to questions and solutions to problems when called upon.
As time went by, Rusty and Beth picked up on the ins and outs of the restaurant business. Moreover, through nobodys efforts but their own, Rusty and Beth became fairly well known in the community. And in 2007, it became evident that the franchise business model the Adcocks were a part of might not be the best answer for them now. There were some inconsistencies in the decision making for all Country Fisherman units. Therefore, Rusty and Beth felt poor decisions independently made by the other franchisees could adversely affect their unit. If the consistency was not going to be upheld by the Tumas, maybe it was time to disassociate their Brookhaven unit from the others.
In March of 2008, Rusty and Beth took the plunge. After coming to an agreement with the Tumas on terms for separation, the Country Fisherman restaurant became Rustys Family Restaurant. Though there were some patrons of the restaurant who were confused of the change at first, it quickly became apparent that the restaurants loyal supporters were truly more worried about who was in charge than what the name was. Once they realized Rusty and Beth were still operating the business, any concerns slipped away. It seemed that the people who operate businesses can create a very strong bond with the customers who support that business. In Rusty and Beths case, that turned out to be a good thing.
Being independent has its drawbacks. Theres no support system to lean on such as large franchise systems. Of course, as small as Country Fisherman was, the support system was not that large. Because of the relationships Rusty had built with the food suppliers, the volume discounts given up with the franchise system were basically negated with other promotions he could take advantage of that he couldnt before.
Staying involved in the community your business is a part of is important. Over time it will be apparent to those people in that community that you are a part of them. In turn, they will support you. It is sometimes as simple as do unto others as you would have them do unto you. Of course, this means hours of hard work, too.
Discussion Questions
1. What are the advantages of buying a franchise operation? What are the disadvantages?
2. What are the advantages of owning your own independent business? What are the disadvantages?
3. Discuss the advantages and disadvantages of different types of business ownership.
The response must address the questions presented here and have a minimum length of 100 words. Post this initial response by 11 p.m. Eastern time on Wednesday.
Respond to two classmates’ posts by 11 p.m. Eastern time on Sunday. Each reply post must have a minimum length of 100 words. All responses must be on three different days. See the rubric provided below for appropriate response guidelines. Responses that simply read “I agree” or “Nice job” are not considered appropriate.
Must use minimum of two academic sources for each post: Initial post, posts to two other students each must have minimum of two academic sources.
Must have a minimum of 3 posts on 3 different days.
