Academic journal article Journal of the International Academy for Case Studies

Subs by Design: The Case of a Family Business in Transition

Academic journal article Journal of the International Academy for Case Studies

Subs by Design: The Case of a Family Business in Transition

Article excerpt

CASE DESCRIPTION

This case focuses on the growth of a family-owned franchise from its inception in 1987 to 12 stores in 2008. The patriarch is now 70 years old and the succession planning for the business is just beginning. The background of the family and history of the company create a portrait of the current situation and provide the environment for making future decisions. The case first concentrates on the issue of growth by providing students with an opportunity to develop a profit and loss statement for a new store offered to the franchisee. All of the key figures available to the entrepreneur are provided allowing students to put themselves into the role of the decision-maker. Secondly the patriarch of the family, Ryan, is thinking about retirement. The case develops Ryan's personality as well as the characteristics and behaviors of his two children over the 20 years of the business. As the founder, Ryan must now decide what is best for the business as well as the family as he becomes less active and the business moves to the next generation. The case provides students with a unique perspective by extensively quoting Ryan and Greg Smith, the founder and his son, thus giving them insight into the thoughts of the individuals involved in the decision making. All of the events in the case are based on a true entrepreneurial experience, but the names have been disguised to provide privacy to the owner. The profit and loss statement uses actual figures and depicts the situation as it existed at the time the offer was made. The case has a difficulty level appropriate for junior to senior level undergraduate students. It is suitable for use near the end of an introductory course in entrepreneurship which is where small business growth is usually covered in entrepreneurial textbooks or in a separate entrepreneurship course that has more of an emphasis on growing the business and succession planning. Although not developed for a finance class, it could be use by emphasizing the purchase decision associated with the Rock Crest location. Depending on the emphasis at least some basic accounting background would be helpful. The case is designed to be taught in two class hours and is expected to required four hours of outside preparation by students. However, there is a lot of latitude provided to the instructor as to what direction to take the case.

CASE SYNOPSES

Ryan Smith, laid off from his position as plant manager for a textiles firm, begins a new career as the franchise owner of a group of sandwich shops doing business as Smith Enterprises. The case covers Ryan's startup of Subs by Design with the help of his family and the trials and tribulations of growing a family business. Startup financing came from some unique sources including from a fellow franchisee in a nearby territory. Early family support came from his daughter Bree who gave Ryan the confidence he needed to open the first two franchises. Bree and her husband, Brad, helped Ryan grow the business during it early days. Greg, Bree's younger brother, was not interested in the business, until an injury kept him from pursuing his first love, professional baseball. After the injury his father urged him to join the company. The case looks at the interaction among Ryan, Greg, and Brad as they continue to grow Smith Enterprises. The triangular relationship eventually results in Brad leaving to pursue a career in real estate.

After Brad and Bree's departure, the company continued to grow. Smith Enterprises is now looking forward to operating 12 stores which include two stores currently under construction. However, recently Ryan was presented with an interesting offer from the franchisor for a prospective store in a potential hot growth area. Ryan must make a decision on the offer within the next three weeks. If he doesn't accept the offer, the franchisor will offer the location to someone else. The case ends with Ryan who is now 70 looking at his retirement and planning for the succession of the business. …

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