Iceberg Heating and Air Conditioning

Iceberg Heating, Ventilation and Air Conditioning (Iceberg HVAC) is a multinational manufacture of military, commercial and residential heating and air condition equipment. They are headquartered in Phoenix, AZ and operate in 57 countries.

Their US operations include a franchise arrangement where local HVAC contactors can be “licensed” to sell and service the Iceberg commercial and residential lines. Franchisees must meet a set of prearranged standards, including an exclusivity arrangement, whereby they cannot concurrently be under another, competing franchise agreement.

There is a problem that Iceberg HVAC has experienced with several franchisees. Service techs go out on service calls. They identify a problem. If the problem is not covered by the Iceberg warrantee, they will sometimes offer the customer a “special arrangement.”

Example: A Service Tech goes to a customer’s residence and discovers that a particular part is damaged. Replacing the part will cost $300 for parts and $200 for labor. They tell the customer and offer them an alternative. They offer to sell the customer the part for $300 (that is a fixed priced they have no control over) and arrange for a “private” contractor to do the labor - for $100 less than the quote.

The customer agrees and that evening, after working hours, the service tech returns and does the installation himself - making $100 for himself, depriving the franchisee and Iceberg of their respective shares of $200 - but saving the customer $100.

Questions

Is this ethical?

If not, what remedy might you propose?