Firehouse Subs has been a successful submarine sandwich chain for 16 years. Based in Jacksonville, FL, the chain experienced year-over-year growth even after the company transitioned to a franchise business model in 2001. However, with the economic slump in 2008, Firehouse Subs began to experience a decrease in sales of about six percent below prior year performance. Given the company had been thriving from inception this concept was completely alien to the founders, Robin and Chris Sorensen. In a down economy, typically consumers will resort to lesser expensive restaurant options; one of which Firehouse Subs would be classified under. Therefore, executives attributed poor performance to poor brand awareness. The challenge ahead is how to revert the negative performance (Pattison, 2010). Overall, there are a couple of problems the Sorensen brothers are facing. To start, the Sorensen brothers considered their approach. The option to discount or decrease product quality was on the table but quickly dismissed. They spent about a six month period waiving the 2% royalty fees in hopes owners would utilize those funds in local store marketing efforts but that did not result in any positive change. After enlisting the help of a professional agency, Zimmerman Advertising, they made the decision to reverse the 2% royalty fee, now requiring owners to contribute again. In addition, the fee would be increased to 4% in an already troubling time. After positive testing was conducted, Firehouse Subs gave markets the option to vote on pursing the proposed marketing strategy tested by Zimmerman. About two-thirds agreed to contribute 4% to the new campaign while the remaining one-third resorted to the standard 2% and a different message. The problem here is inconsistency throughout the nation on the brand message (Pattison, 2010). The recommended plan of action suggests that the founders of Firehouse Subs take an autocratic approach in the company’s branding message. The company is required to have structure and without a solid understanding of who they are, all else will fail. As long as the brand message is consistent, any freedom given to owners should be considered safe. On the contrary, the leaders are suggested to take a democratic approach in regards to the advertising fees, especially since the increase is probably not disclosed in their original franchise agreement. The suggestion allows owners to vote on their desired outcome, majority will rule. However, if the ruling is not what the leaders were hoping for, the option is again provide to local markets. This will allow for a consistent message and increase advertising levels in the areas that see the value.
Boudjouk, Danielle M., "LEADERSHIP CASE STUDY: Spending More on Ads to Overcome a Slump, By Kermit Pattison" (2015). MBA Student Scholarship. 41.