Question 1: Assuming Bachand’s proposed system is accepted; compare the profitability of a franchised PK store to a corporate-owned store.

Answer: In my point of view the proposed system of Bachand seems to be more profitable for PK in contrast to the current franchise system. I would like to quote following reasons in favor of my conception:

Incentive system:
In the franchise system franchisee was to be had a definite salary of $50000 but he had full liberty to draw as large salary as he wants contingent to the growth of equity by means of profitable operations and diminishing of debt. So, PK was to pay the salary on the basis of the growth of equity. But in the proposed system by Bachand the salary was made fixed with additional...

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1. Situation

Background: Hawthorne operated several different retail divisions in petroleum, clothing, financial services and general merchandise. One of the products Hawthorne’s general merchandise stores carried was automotive products including replacement parts. In the mid-1990s, Hawthorne realized that its general merchandise stores were not addressing the needs of two key customer segments in the automotive parts industry: serious “do-it-yourself” consumers and commercial consumers. Hawthorne decided to replicate stand-alone auto stores (such as, AutoZone, Pep Boys) business model in Canada under the Part King name.
Part King, Inc opened its first store in Guelph, Ontario in 1996. By 2005, the total number of franchise stores has surpassed 50, with an average of 10 to 12 new stores opening each year. PK targeted both hobbyists and commercial customers, each of which had very specific and very different needs. Hobbyists were do-it-yourself auto enthusiasts as mentioned earlier; commercial customers were local garages and dealerships that performed repair services.