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    2.6 Case Study Subway in China: Not So Easy: Questions

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    Rajasekaran
    Jim Bryant has opened 45 Subway stores in Beijing over the past decade as the brand's representative in China, but his quota was 67 stores. Subway has charged him $100,000 in damages for not meeting the required number. While some Subway restaurants were initially popular among Americans in China, the menus did not appeal to Chinese tastes as they did not tailor options to local preferences. There are also challenges with franchisees not consistently following the brand's requirements and underestimating construction costs. Bryant is now considering selling his stores and development rights in Beijing as he prefers developing new opportunities over inspecting existing stores.

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    2.6 Case Study Subway in China: Not So Easy: Questions

    Uploaded by

    Rajasekaran
    318 views1 page
    Jim Bryant has opened 45 Subway stores in Beijing over the past decade as the brand's representative in China, but his quota was 67 stores. Subway has charged him $100,000 in damages for not meeting the required number. While some Subway restaurants were initially popular among Americans in China, the menus did not appeal to Chinese tastes as they did not tailor options to local preferences. There are also challenges with franchisees not consistently following the brand's requirements and underestimating construction costs. Bryant is now considering selling his stores and development rights in Beijing as he prefers developing new opportunities over inspecting existing stores.

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    Jim Bryant has opened 45 Subway stores in Beijing over the past decade as the brand's representative in China, but his quota was 67 stores. Subway has charged him $100,000 in damages for not meeting the required number. While some Subway restaurants were initially popular among Americans in China, the menus did not appeal to Chinese tastes as they did not tailor options to local preferences. There are also challenges with franchisees not consistently following the brand's requirements and underestimating construction costs. Bryant is now considering selling his stores and development rights in Beijing as he prefers developing new opportunities over inspecting existing stores.

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    © All Rights Reserved
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    Download as doc, pdf, or txt
    318 views1 page

    2.6 Case Study Subway in China: Not So Easy: Questions

    Uploaded by

    Rajasekaran
    Jim Bryant has opened 45 Subway stores in Beijing over the past decade as the brand's representative in China, but his quota was 67 stores. Subway has charged him $100,000 in damages for not meeting the required number. While some Subway restaurants were initially popular among Americans in China, the menus did not appeal to Chinese tastes as they did not tailor options to local preferences. There are also challenges with franchisees not consistently following the brand's requirements and underestimating construction costs. Bryant is now considering selling his stores and development rights in Beijing as he prefers developing new opportunities over inspecting existing stores.

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    of 1

    2.

    6 CASE STUDY
    Subway in China: Not so easy
    In Beijing, Jim Bryant is known as the Franchise king. His office is decorated with awards for
    being subways top international franchise salesperson !!", highest percentage increase in
    unit sales #$$#, and most franchises sold in %sia June #$$& to 'arch #$$(. )ubway is the
    third largest *.) fast+food chain in ,hina after 'c-onalds and .F,.
    /0en though many franchisors ha0e been lured to ,hina by its .& billion people and its
    strong economy, the ,hinese market is an especially difficult one. 'any firms 1 including
    %23, ,hillis 4rill 2 bar, -unkin -onuts and rainforest caf5 1ha0e closed their stores. %nd
    while Bryant has opened ! subway stores in Beijing o0er the past decade, his 6uota for the
    time period was &7 stores. Bryant says subway has charged him 8#,$$$ as damages for not
    opening the re6uired number of restaurants.
    Jim Bryant started doing business in ,hina in the !"$s when he set up a shoe manufacturing
    factory in -atong, ,hinas northern coal capital. In !"(, he signed an agreement to be
    subways representati0e in ,hina. Bryant would be responsible for recruiting local
    entrepreneurs to become subway franchisees and act as a liaison between the franchisee and
    )ubway. %s compensation, Bryant would recei0e half of the initial 8$,$$$ franchising fee
    and one+third of the 79 royalty fee paid to subway. Bryant also recei0ed the rights to open
    his own subway sandwich shops.
    %lthough many subway restaurants were immediately popular among %mericans, the
    ,hinese were confused by the choices. Bryant reduced the confusion by printing signs that
    e:plained how to order. 'any locals also did not belie0e that subways tuna fish was made
    from a fish since they could not see the fishs head or tail. *nlike other chains such as .F,
    that offers shredded carrots, fungus or bamboo shoots, subway did not tailor its menus to
    appeal to the ,hinese tastes. %ccording to a subway franchisee, ;)ubway should ha0e at
    least one item tailored to ,hinese tastes to show that they are respecting local culture .
    <here are a host of other potential difficulties doing business in ,hina. )ome franchisees
    refused to adapt to the franchisors re6uirements for consistency. =ne of subways earliest
    franchisees decided, for e:ample, to change the restaurants colours and name. ,onstruction
    costs were se0erely underestimated on one job. %nd in a third property, the franchisee was
    locked out of a location e0en though it had si: months remaining on its lease. %pparently, the
    property owner found a new tenant who paid two years rent up front. >ow Bryant will only
    sign leases with business entities, not indi0iduals.
    Bryant is currently considering whether to sell his stores and the rights to de0elop Beijing.
    ?ike many entrepreneurs, while he enjoys building business, he does not like his role of
    inspecting stores for o0erall cleanliness, recipe consistency and d5cor@ ;I dont like pruning
    the tree. I like to plant the seed and watch it grow .
    Questions:
    . -escribe the pros and cons of a ,hinese business persons in0esting in a )ubway
    franchisee.
    #. 3hat are the pros and cons of subways de0eloping its own stores 0ersus using franchising
    as a means of selling to the ,hina marketA
    &. )hould subway modify its menu to meet ,hinese tastesA If yes, howA /:plain your answer.
    (. 3hy does a franchisor commonly penaliBe master franchisees such as Bryant when they do
    not de0elop sufficient franchises within a gi0en time tableA

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