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(AP Photo / Nam Y. Huh)
Despite the fact that franchise giants such as Burger King, KFC, 7-Eleven, Dunkin 'Donuts and Pizza Hut have had to deal with franchise associations for many years, McDonald's has never national franchisees. Now, after all these years, things are about to change.
Various media to have reported that 400 McDonald's franchisees recently met in Tampa, Florida, to present and discuss their complaints about McDonald's recent marketing strategies. Franchisees attending the meeting would represent 25% of US McDonald's sites. A major complaint has been that franchisees must redevelop their sites with innovations, including touchscreen kiosks. The major complaint according to the the Wall Street newspaper is the result of improvements to the franchisee site, which did not result in increased sales. It is ironic that I was recently in a McDonald's in the New York area who had installed the new order kiosks, which seemed a little confusing. I asked one of the turnkeepers how sales were selling after the system was installed and he said, "It's no different." It's obviously anecdotal, but interesting, given the news about McDonald's dissatisfied franchisees.
In a follow-up article, Franchise hours On Oct. 12, at the National Owners Meeting in Tampa, McDonald's business owners decided to form a self-financing franchisee association. FT said the next meeting of the franchise is scheduled for Dec. 12 in Dallas.
"We always welcome a constructive and collaborative dialogue with our franchisees and are determined to do so," said a spokeswoman for McDonald's. CNBC in an email. "We will continue to work closely with our franchisees to ensure they have the support they need to run excellent restaurants and provide customers with a high quality experience and practical benefits."
In recent years, McDonald's companies and franchisees have faced a number of challenges ranging from employee complaints to the NLRB. However, for franchisees, their revenues and profitability are top priorities. Despite changes in McDonald's and menus, sales in the United States were weak. Franchisees are required to invest substantially in their sites of implantation, the sales growth forecasts are much larger. To date, many franchisees have not experienced the expected sales increase.
Franchise associations
The creation of the Franchisee Association Coalition several years ago, and the ratification of the Franchisee Rights Charter, could foreshadow an increased number of franchisees wishing to create their own associations. How do franchisors manage the training of a franchisee association? Resist, encourage or remain neutral?
Franchisers have always expressed varying opinions as to whether a franchisor should resist or support a franchisee association. Some franchisors believe that, except in case of significant problems with their franchisees, it is better to leave quite quiet. In addition, some franchisors thought that if there was an association of franchisees, there would be an organized group that could thwart the initiatives of franchisors and possibly interfere with the operation of the franchise system. However, many franchisors have promoted and encouraged franchise organizations or advisory boards.
Franchise associations Advantages and disadvantages
Advantages:
- The franchisor can deal with a representative group of franchisees.
- New products and programs can be presented to the group for comments and suggestions.
- The organization of the franchise can point out problems or potential problems to the franchisor before things get out of hand. Problems can be discussed between the franchisor and his franchisees in order to get a solution instead of engaging in conflict and litigation.
- Franchisees may feel that the franchisor is more willing to deal fairly with franchisees because they have the opportunity to express their lack of satisfaction with certain aspects of the operation of the franchise.
- Prospective franchisees will see an association of franchisees as a positive attribute of the franchise company.
- Franchisees members of an association may have a heightened sense of loyalty and commitment to the franchise organization.
- Both parties can speak openly at association meetings and address sensitive topics productively. In many cases, a relationship with increased trust can develop between franchisors and franchisee representatives.
disadvantages:
- There is an organization capable of challenging and resisting the new programs implemented by the franchisor.
- The association may have the legal capacity to plead against the franchisor and tap into the financial resources of its members.
- More difficult to deal with a group of franchisees compared to individual franchisees. It's hard for the franchisor to "divide and conquer"
- Some members could be activists and try to fight against the franchisor
- A poorly structured association with negative franchisees can create problems, with some members trying to promote their own agenda.
I am of the opinion that a franchisor should encourage an association of franchisees as soon as the system has reached a minimum size of 50 to 100 franchises. Resist or discourage the formation of an association, as it is feared that conflicts and major problems do arise, goes against good business sense. If the franchise program is flawed and franchisees are unhappy, resisting an association is to ignore the obvious. Franchisors were able to solve difficult problems because the franchisor could work with a franchisee association.
A reduced franchise system may be an advertising or marketing committee that includes franchisee representatives. This can allow both parties to establish a working relationship and establish mutual trust. It can also serve as a forum for the franchisor to get feedback from franchisees from time to time.
"Franchisors must recognize that creating a clear and two-way communication channel with their franchisees, including the contribution of franchisees on issues affecting the results of the operator, is the best way to prevent training of external franchise associations, "Gary Occhiogrosso. Founder and managing partner Franchise Growth Solutions, LLC.
As the situation of McDonald's shows, it is inevitable that franchisees will talk to each other and share good and bad news. It is far more effective that franchisors recognize this fact and strive to have a productive relationship with their franchise.
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Despite the fact that franchise giants such as Burger King, KFC, 7-Eleven, Dunkin 'Donuts and Pizza Hut have had to deal with franchise associations for many years, McDonald's has never national franchisees. Now, after all these years, things are about to change.
Various media to have reported that 400 McDonald's franchisees recently met in Tampa, Florida, to present and discuss their complaints about McDonald's recent marketing strategies. Franchisees attending the meeting would represent 25% of US McDonald's sites. A major complaint has been that franchisees must redevelop their sites with innovations, including touchscreen kiosks. The major complaint according to the the Wall Street newspaper is the result of improvements to the franchisee site, which did not result in increased sales. It is ironic that I was recently in a McDonald's in the New York area who had installed the new order kiosks, which seemed a little confusing. I asked one of the turnkeepers how sales were selling after the system was installed and he said, "It's no different." It's obviously anecdotal, but interesting, given the news about McDonald's dissatisfied franchisees.
In a follow-up article, Franchise hours On Oct. 12, at the National Owners Meeting in Tampa, McDonald's business owners decided to form a self-financing franchisee association. FT said the next meeting of the franchise is scheduled for Dec. 12 in Dallas.
"We always welcome a constructive and collaborative dialogue with our franchisees and are determined to do so," said a spokeswoman for McDonald's. CNBC in an email. "We will continue to work closely with our franchisees to ensure they have the support they need to run excellent restaurants and provide customers with a high quality experience and practical benefits."
In recent years, McDonald's companies and franchisees have faced a number of challenges ranging from employee complaints to the NLRB. However, for franchisees, their revenues and profitability are top priorities. Despite changes in McDonald's and menus, sales in the United States were weak. Franchisees are required to invest substantially in their sites of implantation, the sales growth forecasts are much larger. To date, many franchisees have not experienced the expected sales increase.
Franchise associations
The creation of the Franchisee Association Coalition several years ago, and the ratification of the Franchisee Rights Charter, could foreshadow an increased number of franchisees wishing to create their own associations. How do franchisors manage the training of a franchisee association? Resist, encourage or remain neutral?
Franchisers have always expressed varying opinions as to whether a franchisor should resist or support a franchisee association. Some franchisors believe that, except in case of significant problems with their franchisees, it is better to leave quite quiet. In addition, some franchisors thought that if there was an association of franchisees, there would be an organized group that could thwart the initiatives of franchisors and possibly interfere with the operation of the franchise system. However, many franchisors have promoted and encouraged franchise organizations or advisory boards.
Franchise associations Advantages and disadvantages
Advantages:
- The franchisor can deal with a representative group of franchisees.
- New products and programs can be presented to the group for comments and suggestions.
- The organization of the franchise can point out problems or potential problems to the franchisor before things get out of hand. Problems can be discussed between the franchisor and his franchisees in order to get a solution instead of engaging in conflict and litigation.
- Franchisees may feel that the franchisor is more willing to deal fairly with franchisees because they have the opportunity to express their lack of satisfaction with certain aspects of the operation of the franchise.
- Prospective franchisees will see an association of franchisees as a positive attribute of the franchise company.
- Franchisees members of an association may have a heightened sense of loyalty and commitment to the franchise organization.
- Both parties can speak openly at association meetings and address sensitive topics productively. In many cases, a relationship with increased trust can develop between franchisors and franchisee representatives.
disadvantages:
- There is an organization capable of challenging and resisting the new programs implemented by the franchisor.
- The association may have the legal capacity to plead against the franchisor and tap into the financial resources of its members.
- More difficult to deal with a group of franchisees compared to individual franchisees. It's hard for the franchisor to "divide and conquer"
- Some members could be activists and try to fight against the franchisor
- A poorly structured association with negative franchisees can create problems, with some members trying to promote their own agenda.
I am of the opinion that a franchisor should encourage an association of franchisees as soon as the system has reached a minimum size of 50 to 100 franchises. Resist or discourage the formation of an association, as it is feared that conflicts and major problems do arise, goes against good business sense. If the franchise program is flawed and franchisees are unhappy, resisting an association is to ignore the obvious. Franchisors were able to solve difficult problems because the franchisor could work with a franchisee association.
A reduced franchise system may be an advertising or marketing committee that includes franchisee representatives. This can allow both parties to establish a working relationship and establish mutual trust. It can also serve as a forum for the franchisor to get feedback from franchisees from time to time.
"Franchisors must recognize that creating a clear and two-way communication channel with their franchisees, including the contribution of franchisees on issues affecting the results of the operator, is the best way to prevent the formation of associations of external franchisees "Gary Occhiogrosso Founder and managing partner Franchise Growth Solutions, LLC.
As the situation of McDonald's shows, it is inevitable that franchisees will talk to each other and share good and bad news. It is far more effective that franchisors recognize this fact and strive to have a productive relationship with their franchise.
