Jim Jorgensen The Initial Days at Discovery Zone

By Blair Boardman, Thomas Hellmann
2001 | Case No. SM56
When the first Discovery Zone, opened January 2, 1990, was immediately popular, chairman Jorgensen and his small team decided to open multiple stores quickly in the belief that whoever was first would own the business. They decided to use franchising as the method of expansion because it would allow the company to expand rapidly, fund its growth, and secure dedicated management. However, the company was unprepared for franchising, as there was no clear market size to support each store. Jorgensen recognized that there were other questions to be answered as well: should all the stores be the same size? Should Discovery Zone also have some company-owned stores? How would franchising change the nature of competition in this newly emerging market? At the time of the case, just 3 weeks after the company had been operational, the principals think about these questions and what they should do next.
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