ted States Border States, including the one nearest to Windsor. Growth prospects seemed unlimited! It appeared to be a perfect fit. The only question was how much of a premium the on$-$going operations would command.

About $10$ days after completing the franchise application, Mr$.$ Keilar received a phone call from the Body Shop inviting him to go to Toronto for a meeting with Shane Richards. Mr$.$ Keilar felt he had already passed a major hurdle because the franchise application had required extensive personal and financial information. If the company wanted to meet him, he must be an acceptable candidate. On a beautiful spring day, he pulled into the parking lot of the Body Shop Canada head office, full of excitement at the prospect of what was about to unfold.

The Meeting

Mr$.$ Richards described the typical Body Shop Canada franchisee: $$female $35$ to $45,$ married with school age$/$adolescent children, limited formal education, and crazy about the Body Shop. Anyway, none of our franchisees have MBA$$s$$ Mr$.$ Keilar realized he had a fight on his hands. $$It seems to me you have a view of what MBA$$s are like, that they$$re all fanatical, hard$-$nosed, money$-$hungry tyrants,$$ said Mr$.$ Keilar. $$I don$$t think that$$s fair, any more than it would be fair to say that all lawyers are alike.$$

This comment seemed to break some of the ice. But if the relationship between the two men had begun to thaw, the discussion that ensued and the information that surfaced over the next hour did nothing to cheer Mr$.$ Keilar. His plan had obviously been a pipe dream.

Mr$.$ Richards was adamant on a number of points. The Body Shop Canada would not grant multiple franchises to a new franchisee; the company first wanted franchisees to demonstrate their potential to handle more than one outlet. The franchisee must personally work in the store full$-$time. Although many Body Shop franchises were held in partnerships, the company was cautious; it was particularly wary of non$-$operating financial partners. If the company did acquiesce, it would want absolute discretion over the content of the agreement. $$We want operators, not investors.$$

Mr$.$ Keilar pressed for information about the Windsor and London stores. The news on these fronts was no better. Goodwill charges would be about $$125,000$ for Windsor and $$250,000$ for London! Expected sales for the two stores for $2015$ were $$600,000$ and $$750,000,$ respectively. Apparently, volume at the London had increased $66$ percent since its relocation. Windsor sales were up $33$ percent over the previous year.

The meeting ended on an amicable note with Mr$.$ Keilar promising to let Mr$.$ Richards know within two weeks whether he was interested in proceeding. If the answer were $$yes$,$ Mr$.$ Richards would consider whether to place Mr$.$ Keilar on a short$-$list of candidates. The short$-$list would be subjected to a $12-$hour battery of interviews and then placed in a store for a week. After the trial, both parties would decide whether to commence training. The Body Shop Canada would not award the franchise until after training had been completed. However, even at this stage, the franchisor could still reject the potential franchisee and leave him or her without recourse.

The Decision

When Mr$.$ Keilar returned home from Toronto his immediate instinct was to rush to his computer to create new pro forma statements, but before doing so he thought it would be helpful to note down his options and his concerns.

Mr$.$ Keilar knew he had a tough problem on his hands. He decided to produce pro forma statements along the lines of his first projections. He had fairly accurate percentage cost data that Mr$.$ Richards had provided for the existing stores. He wanted to compare performance for each of the existing operations to a start$-$up$,$ assuming each was operated as a single entity by a sole proprietor. Exhibit $3$ contains the statements.

Mr$.$ Keilar had some important questions to consider beyond the financial analysis. Could he see himself inside an $80-$square$-$metre store for the next $10$ years? Could Mr$.$ Richards be persuaded to compromise? After all, how many people could fit his ideal profile of someone with the right balance of spiritual devotion to the Body Shop$$s philosophy, business acumen, and access to the required capital of around $$250,000?$ Also, what was he able to afford? Was there anything Mr$.$ Keilar had missed in his analysis? Somehow this was going to be a lot more difficult than doing a case study. This was his life!