Firehousesubs Case Analysis Essay Example

royalty of 6 percent sales and a 3 percent advertising fee (2 percent toward local advertising). He suggested eliminating 2 percent local advertising fees to allow franchisees to create their own marketing strategies. Most franchisees approved the idea but some executives felt giving money back to the franchisees was a bad idea. After six months of the new strategy, Firehouse Subs saw a system- wide sales decline of 6 percent. In result of this, reclaiming franchisees local advertising fee was recommended and also it being doubled from 2 to 4 percent which would increase payments from 9 to 11 percent of sales.

Issues In 2008, Firehouse subs had a sales decrease from year-to-year throughout the entire chain by 3.4 percent, which is a company first. Secondly, when trying to switch their current marketing methods, six months later, the sales worsened by six percent from the previous year. They believed the decline was due to the lack of brand awareness and their biggest competitor, Subway. Subway holds a campaign of five dollar foot long sandwiches. Lastly, the advertising agency suggests the executive team increase the advertising fee which would be difficult when the franchises are already struggling with lower sales and profits.

Recommendations The Franchisees should return to paying the advertising fee because there wasn’t a sales decline until 2008. In addition, the advertising team has more brand awareness and can effectively market the products better. Firehouse should incorporate loyalty cards which would keep customers returning to eat at their shop. They can construct a card that requires them to buy five sandwiches and then the sixth one would be free! The company should

research deeper in how they want to market their products in a more creative way before they agree to pay a higher fee for advertising. Increasing sales is the main concern for this company; in this, they should focus on excellent customer service such as Chic-fil-a. Customer service can create buzz marketing, resulting in new customers inquiring about Firehouse subs.