Quick Lube Franchise Corporation

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Chapter 11: Case Study; Quick Lube Franchise Corporation 1. What grounds might QLFC have for filing a lawsuit against Huston? • QLFC filed a lawsuit against Huston on the grounds that there is a conflict of interest in Huston being both the supplier and also the parent company to the QLFC franchise. 2. Why do you think Huston has asked for a meeting with Herget? • I believe Huston has asked for a meeting with Herget because he is worried that Herget’s case could end up financially hurting his company. He may be more willing to negotiate a deal that both parties can agree to. Prior to meeting with Huston’s CEO to discuss the franchisees concerns, Herget researched the relationship between Super Lube and QLFC. Huston brushed off the idea that the past was relevant to the relationsip between Super Lube and QLFC. Huston felt that the franchisees should be thankful for the bailout, that their acquisition of 80% of the company allowed Super Lube to remain in business and ultimately allows QLFC to remain in business as well. 3. What advice would you give Herget as he considers Huston’s request for a meeting with QLFC? • I would advise Herget to meet with Huston, but before doing so outline the demands of the QLFC’s. Since Herget gave the three hour monologue the first meeting, I would suggest Herget allow Huston to lead the discussion. Listen first and see what they come to the table with and if it meets any of the demands of the QLFC’s and if any compromises can be made. I would also suggest he propose that QLFC’s cease paying the 7% royalty fee to Super Lube, since they are contractually obligated to purchase all necessary products including oil from Huston already. I would suggest that Huston lower his product price, especially his oil so it is more comparable to

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