Video Case: Sonic Is Booming
Entrepreneurship is the path to success throughout the world. More millionaires come from the
ranks of entrepreneurs than any other place. Because the work is so hard, however, fewer people
than you would imagine are willing to take the plunge.
One of the major decisions an entrepreneur must make is what form of business to use; sole
proprietorship, partnership, corporation, franchise, or what? Sonic is a large chain of fast–
‐food restaurants with over 3, 000 drive–‐ins located from coast to coast. It began as a sole
proprietorship, evolved into a partnership, later added many franchises, and eventually became a
publically traded corporation. This is not an unusual progression for a business, but Sonic did it
relatively quickly and effectively.
Troy Smith started the first Sonic in 1954. It was a sole proprietorship that took the form of a
drive–‐in restaurant, much like other drive‐ins of that era. Smith brought in a partner is 1956,
and the business began to grow. The partner shared profits and liability with Smith. When the
partner died, Smith found many other people who were interested in becoming franchisees. The
company grew even faster then. In fact, Cody Barnett’s father owned seven Sonic franchises.
Cody eventually took over those franchises and added 15 more. There is much to learn about
buying and running a number of franchises, and Cody schooled himself in the managerial
techniques and strategies that he would need. Like most franchisors, Sonic was a big help in that
Clearly, understanding the various forms of business is key to both getting started in business
and then growing the business later. If you plan to franchise the business, it is critical to find
franchisees like the Barnetts who understand that the business is their own and also understand
the value of having the foundation of a well–‐known brand name and a ready customer base.
One thing franchisees learn from the very beginning is that running your own business takes a
lot of work. At first, you have to be there whenever the business is open. That means long, long
hours of work – and away from the family. That is true of many businesses and the search for
balanced living is one of the most important skills a business owner must learn.
You don’t have to go very far in most towns to see the results of franchising. On every corner,
there is a fast–‐food restaurant of some other franchise that is serving the area and travelers that
come to that area. Many are obviously very successful. Sonic is one of them. But, as you can see
in this video, the success does not come easily. It takes lots of time and hard work.
>From Nickels, W.G., McHugh, J.M., and McHugh, S.M.. (2010) Understanding business. 9th
ed. New York, McGraw–‐Hill.
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