Dunkin' Donuts Case Study Essay

1703 Words Dec 27th, 2013 7 Pages
1. What does Tommy want?

Tommy was looking for a change, especially since he just finished putting his third and last child through school. Tommy also operated a food section that served breakfast items (other than doughnuts) and hamburgers, which he claimed generated half of the sales. He was interested in buying out the franchise from Dunkin' Donuts. He would take down the Dunkin' Donuts sign and continue to operate the shop under a new store name of his choice. He also planned to negotiate direct lease with the landlord instead of leasing the building and land from Dunkin' Donuts. However, he mentioned to Dunkin' Donuts that he was not interested in pursuing this option.
Tommy seemed to be interested in selling the business to
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To continue with Tommy handling the franchise since the franchise was delivering increasing revenues even if they were not performing according to the Dunkin' Donuts standards. However, this will lead to increasing operational costs of handling customer complaints and might also affect the Dunkin' Donuts as a brand.

4. How do you evaluate the options?

The evaluation of the options can be done on the cost-benefit analysis including long-term implications. Since the first two options above involved heavy transaction costs such as litigation costs, impact on brand, fear in the minds of other franchise owners etc. This might lead to closing down on the operations of Randolph store till the litigation is settled which might lead to loss of revenues from the area where the Randolph store is situated. So, selecting these options have minimum benefits and maximum costs involved.

The last option would also impact the brand of Dunkin' Donuts but would however have a regular stream of revenue from the franchise. However, the problem of low standards, fees not paid on time, handling of customer complaints would entail excess operational costs required to monitor using CSG and responding to customer complaints and avoiding word-of-mouth publicity by giving discounts. Again, this would lead to bringing in a temporary solution and Dunkin' Donuts would have to deal with the problem created even later. The third and the fourth options seem more beneficial than

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