After 20 years of restaurant experience, Billy started Energy Plus eight years ago to produce and retail premium-priced handmade healthy energy snacks for hikers and active people. The products were sold in a small retail cottage-style store. He made all of the high-quality products herself and supervised a staff of three part-time students who primarily worked during the busy summers in their resort town.

Due to overwhelming popularity of her products, two years ago Billy doubled the size of his store, legally incorporated her business, and spent $50,000 to expand the capacity of his equipment. A typical energy snack purchase averaged $18.00 per person, with monthly store sales ranging from $33,000 in the slow months to $62,000 in the busy tourist months (May 15th through October). The average gross margin for all products was approximately 31 percent and net profits after taxes were stable at nine percent. Over the past few years sales and profits had seemed to reach their maximum and Billy now wondered what other options there were for her business.

Marketing had initially been done exclusively by Billy, but last year she hired a local marketing firm, Magic, to take care of the Energy Plus’s advertising and promotional campaigns.  Billy was surprised by the odd Magic promotions and that many clients hadn't seen or heard the ads, but mostly that there had been little change in sales in spite of the $25,000 marketing fees Magic had billed him.

Billy regularly tested new products and she had recently developed a new product called E-Plus Gels that could be produced with the current machinery and inventory. Although the product used high priced, premium ingredients and was very time consuming to produce, Billy priced E-Plus Gels to compete with a similar product at a nearby competitor that sold lower¬ priced energy food.

Recently, Billy read an article stating that franchising was a growing trend throughout North America that could lead to significant profit increases for the franchiser. After learning more about franchising, Billy advertised his wish to franchise Energy Plus in numerous newspapers. After one week, he received a visit from the owner of the Active Resort Group (ARG), who was interested in purchasing one YummYummeries franchise for each of its 24 ocean-side locations. Billy was unprepared for such a quick response and was surprised when ARG offered him a franchise payment of $20,000 per store, plus two percent of all sales for five years in return for Billy agreeing to train the staff of the new stores.
While watching the evening TV news that night, he discovered that a truck driver strike had been planned that would result in all deliveries to area businesses being cancelled until the dispute was resolved. As the busy tourist season was about to start, Billy wondered what impact the possible strike might have on his business and the ARG franchise deal, and so decided to seek advice as to his best plan of action.