Case On RELE
Case Study on RELE-Rouen: Language Immersion in Normandy
Executive Summary
Maxime is the co-founder of RELE-Rouen, a franchise language school under RELE at Rouen, France. The business took a downturn during the economic crisis from 2009 to 2011 and it has been losing money for three consecutive years. The franchise contract with RELE is due for renewal in two month. At this time, Maxime is presented with three options:
1. Renew franchise contract with RELE
2. Switch to OILT programs
3. Sell the building to EFEL
This report first explored the constrains that Maxime faces in this decision making process. And then the three options are analyzed and compared in details by using a set of criteria, including financial return, franchise models comparison, and other business strategy related considerations, i.e. customers, company, distribution channels and market outlook. The people perspective in this decision making process is also being examined.
Based on the findings, RELE-Roune will face another year of loss if RELE does not allow Maxime and Beatrice to run their weekend programs anymore in 2012. OILT is only more profitable if they can sell at a much higher quantity than they do now. And the 1.5m offer from EFEL is much below the valuation of the building and their business.
Therefore, it is vitally important that Maxime first determine RELE’s willingness to grant Roune more freedom in program offering in the future. If RELE refuses to, Maxime and Beatrice has to choose between OILT and selling at a loss to EFEL. Maxime and Beatrice should also look for an OILT franchisee that is in a similar geographical location, i.e. a rural area in close proximity to a metropolitan city, to understand their marketing strategy and the new company identity in order to estimate their required initial investment and future business potential if they are to switch to OILT.
Constraint
RELE’s centrally controlled sales activities and program offerings are largely the
Executive Summary
Maxime is the co-founder of RELE-Rouen, a franchise language school under RELE at Rouen, France. The business took a downturn during the economic crisis from 2009 to 2011 and it has been losing money for three consecutive years. The franchise contract with RELE is due for renewal in two month. At this time, Maxime is presented with three options:
1. Renew franchise contract with RELE
2. Switch to OILT programs
3. Sell the building to EFEL
This report first explored the constrains that Maxime faces in this decision making process. And then the three options are analyzed and compared in details by using a set of criteria, including financial return, franchise models comparison, and other business strategy related considerations, i.e. customers, company, distribution channels and market outlook. The people perspective in this decision making process is also being examined.
Based on the findings, RELE-Roune will face another year of loss if RELE does not allow Maxime and Beatrice to run their weekend programs anymore in 2012. OILT is only more profitable if they can sell at a much higher quantity than they do now. And the 1.5m offer from EFEL is much below the valuation of the building and their business.
Therefore, it is vitally important that Maxime first determine RELE’s willingness to grant Roune more freedom in program offering in the future. If RELE refuses to, Maxime and Beatrice has to choose between OILT and selling at a loss to EFEL. Maxime and Beatrice should also look for an OILT franchisee that is in a similar geographical location, i.e. a rural area in close proximity to a metropolitan city, to understand their marketing strategy and the new company identity in order to estimate their required initial investment and future business potential if they are to switch to OILT.
Constraint
RELE’s centrally controlled sales activities and program offerings are largely the