Peter and Elaine Moss: Franchisees

Abstract

Peter Moss, a business school professor, and his wife, Elaine, a corporate executive, bought a Hair Shear franchise in the suburban Maryland area in July 2007. Hair Shear was a national chain of over 2,000 stores, all of which were franchisee owned. Peter and Elaine Moss contracted with Philip Levinson, a commercial real estate agent authorized by Hair Shear, to obtain a suitable location for their franchise. During her training session at Hair Shear headquarters in Kansas City, Missouri, Elaine learned of the importance of a good location for the success of the franchise. The first location identified by the real estate agent did not work out because the strip mall’s main tenant, a day spa, vetoed the entry of a hair dressing salon, considering the salon to be a competitor. Elaine Moss identified a second location only to be told much later by the real estate agent that the location was taken by a barber friend of the landlord. Disappointed by their inability to find a suitable location, the Moss’ met a couple who owned multiple Hair Shear stores in Maryland who suggested that they typically negotiated directly with landlords. This couple suggested a third location for the Moss’ to consider. The dilemma facing Peter and Elaine Moss is two fold: “which of the two was the ideal location for their store?” The larger question was,” should they bypass the authorized real estate agent and negotiate directly with the landlord?”