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This case was written by Todd A. Finkle, University of Akron, as a basis for class distinction rather than to illustrate either effective or ineffective handling of a business situation.

Terry Smith has spent the last six months preparing to purchase a Beanos Ice Cream franchise. Because his personal assets were limited, Smith needed a partner who could finance the purchase. After Smith found a prospective partner, Barney Harris, they negotiated a purchase price with Beanos. Then Harris gave Smith a partnership proposal. As the case opens, Smith is evaluating the partnership proposal. He has three choices: to accept Barney Harris’s partnership proposal, to make a counterproposal, or to try to find a new partner.

Introduction

Two months ago, Terry Smith had been so confident that he would soon own his own Beanos Ice Cream franchise that he had put an “I LOVE BEANOS ICE CREAM” bumper sticker on his Honda. As he looked at it now, he noticed how faded it had become in such a short time. He wondered if in fact it had been a short time—or a lifetime.

Until recently, Smith had rarely second-guessed himself. After carefully researching an issue, he would base his decision on the facts and then proceed—without looking back. Now, however, he knew he had to put all of the momentum from the past six months to one side. He had to forget about the months spent investigating franchises, selecting Beanos, writing his business plan, and looking for financing. He had to forget about the fact that he had found only one prospective partner who could finance the deal — Barney Harris — and that he and his partner had spent several more months negotiating to purchase the franchise. He had to set aside his own emotional investment in the deal now and make one more critical decision: Should he go into partnership with Harris?

If he signed the partnership