A recent lawsuit filed by sandwich franchisor Capriotti’s underlines the importance of brand management for franchise companies. The franchisor sued its Las Vegas-based franchisee, seeking to terminate the franchise agreement in reaction to the franchisee’s co-advertising campaign with a strip club, featuring the tagline “a match made in Vegas heaven: boobs and Bobbies.”
Las Vegas-based Capriotti’s Sandwich Shop is looking to expand. The company is looking for expansion deals that would commit well-funded buyers to open a number of stores in defined territories. This strategy can work very well for a franchise company, so long as it understands at the outset how using development agreements for expansion is fundamentally different from growth through adding single-unit operators.