Ice Delights Case
In case of franchisee's failure, the parent company is not carrying any financial risk, which creates some doubts as to the parent company's support and dedication to the project. Moreover, parent company was still uncertain weather it would proceed with the Florida franchise due to the company's limited capacity to provide products and assistance given its priority to California franchise. The fact that the company did not want to be legally obliged but yet could have the possibility to withdraw during 9 months indicates that all of the risks would be on Mark, Paul and Eric, whether for Icedelihgts such agreement appeared to be risk free. Given such conditions of the agreement, there is little that the owners could do to lessen the level of risk in case the project will not be carried out or the business was struggling.
Due to the fast expansion in early years, Icedelights had some financial problems. They mainly accrued as a result of poor organizational and control system. Company stressed its commitment to slow, quality growth. In view of that, it is rather suspicious why Mark, Paul and Eric were required to expand at the alarming rate without even being informed where their first stores will be located. The parent company is certainly aware that the plan of opening so many stores can break easily, leaving franchisees in the financial troubles. The fast