Porcini’s restaurants an Italian specialty restaurant chain located in Boston Massachusetts, owns and operates 23 restaurants in the northeastern part of the United States and employs over 900 employees. The company’s challenge is to expand its restaurant chain working within its limited resources and brand recognition. Complicated with a saturating domestic restaurant market and major brands currently in the market creates a formidable challenge for Porcini’s Pronto operations.
The problem was to determine the appropriate course of action for the company to take between franchising and syndication. Considering using a SWOT at first glance the decision to analyze the different methodologies using…show more content… You could contractually require them to personally participate in the business, and restrict them to one property until they’ve proven themselves.” He then described typical terms in the franchise restaurant agreement: a 20 – year term with renewal at the franchisor’s option; a 5% to 6% royalty on gross revenues, and an up-front fee. “That fee depends on the strength of the brand,” he noted. “And you can structure the deal so that each franchisee is responsible for his own financing.” He explained that some franchisors handled all development, including market analysis, feasibility studies, site selection, and construction themselves, then lease the property to the operator. “But in others,” he continued, “franchisees must buy or lease the land in an attractive location, and build the restaurant themselves. Since Porcini’s doesn’t have a construction department, which might be the way you should begin.”
“Syndication has advantages aside from limiting your capital outlays,” said the consultant “I think it will bring you more prime sites along the highway system. Prime undeveloped locations are mostly owned by investors. If you can turn their land into a cash – generating business, you’ll be more successful in getting the sites you want”.
Syndication would leave Porcini’s in full control of hiring, training, performance