PizzaTop, a fast-growing pizza chain based in Australia, has gained a loyal customer base due to its innovative menu, which combines traditional Italian recipes with unique Australian ingredients. Founded in 2015, the company currently operates 25 company-owned outlets in major cities across Australia. Known for its exceptional quality and fast service, PizzaTop has become a favorite among food enthusiasts, particularly for its kangaroo meat pizza and signature garlic cheese rolls.
With its current outlets performing well, PizzaTop’s management team is exploring ways to expand the brand nationally and internationally. The two main strategies under consideration are franchising and continuing with company-owned expansion.
Franchising would allow PizzaTop to grow quickly by partnering with franchisees who would invest in and manage new locations. This strategy would provide an infusion of capital without requiring PizzaTop to bear the full financial burden of expansion. It would also allow the company to expand rapidly into new regions. However, franchising comes with risks. Maintaining quality and consistency across franchise locations could be a challenge, potentially harming the brand’s reputation. There’s also the risk that poorly performing franchisees could reflect negatively on the overall brand.
Alternatively, PizzaTop could continue with its current model of company-owned outlets, giving it full control over operations and ensuring that its high standards are maintained. However, this approach requires significant upfront investment, and the company may struggle to fund expansion at the pace necessary to compete with established pizza chains like Domino’s and Pizza Hut.
PizzaTop’s leadership must now decide whether to franchise the business to accelerate its growth or maintain its current strategy of company-owned outlets to preserve control and quality.
Questions for students:
Q1. Define the term “franchise.” (2 Marks)
Q2. Explain the difference between internal and external growth. (4 Marks)
Q3. Discuss whether PizzaTop should franchise its operations or continue expanding through company-owned outlets. (10 Marks)