Top restaurant brands offer insight on what factors are critical in developing a successful franchisor-franchisee relationship.
Franchising is a fast path to growth for a QSR, fast casual and pizzeria brand, but only if the operations model is solid and the franchisor is willing to work alongside franchisees throughout the process, and the franchisee, for its part, must be willing to take advice and criticism.
But as with any sort of business relationship it’s not always easy to establish a strong, mutually rewarding connection and there are more than a few hurdles when it comes time for a franchisor and a franchisee to find a middle ground.
How to hurdle, and eventually eliminate those obstacles, was the focus of a panel talk, “Finding Middle Ground: Franchisees and Franchisors Weigh In,” at the Restaurant Franchising & Innovation Summit held this month in Nashville, Tennessee.
The annual RFIS event, hosted by Networld Media Group, is a three-day conference providing a forum for executives from leading brands to share their success stories and how they are innovating to grow their franchises. Networld Media Group is the parent company of Fastcasual, Pizza Marketplace and QSRweb. The media company’s next event is a virtual pizza conference, the Pizza Leadership Virtual Summit, which will take place July 27.
The RFIS panel participants included Justin Bartek, marketing director at JINYA Holdings; Adenah Bayoh, founder and franchisee at Cornbread, IHOP; Kristen Briede, senior VP of international and global brands for PF Chang’s and Amy Ohde, executive director, launch support at Chick-fil-A. The panel session was sponsored by Hyperlogology. Patrick Pleiss, co-founder, moderated the talk.
Deciphering, defining the middle ground
In kicking off the panel talk, Pleiss began by defining what the middle ground is and it’s not the automatic vision that comes to mind.
“It’s not just two coming from complete opposite ends. What’s middle ground is often times relative to perspective and the ability to be able to hear someone else’s perspective and grow yourself and learn yourself and that only drives system performance,” said Pleiss, adding the scenario will also drive individual store performance and multi-location performance.
“In order to take information from the franchise level and allow it to impact the brand to drive growth is just something that is magical right. It’s one of those things, if you do it right, you can share the success among the entire system of franchises and the brand,” he said.
The “magic” comes down to mutual respect — the franchise system respecting franchisees, franchisees respecting customers and the formation of a symbiotic relationship.
It’s all about trust
“It all comes down to trust. You [the franchisor] trust them, you vet them, you empower them. It all comes down to that,” Pleiss said.
The ability to trust, according to all the panel speakers, is key to attaining a middle ground connection in which a franchisor and franchisee come to an agreement, whether it’s related to a menu change, staffing solutions or any other operational issue.
“You have to trust the local franchise in the community they are in. [It’s about] the franchisor and franchisee helping each other,” said Bartek.
For all involved, the brand’s trust is strongly tied to listening by the franchisor as well as by the franchisee.
At PF Chang’s trust is absolute in finding the middle ground and the middle ground can be very different depending on the size of the franchisee as well as location and cultural setting, Briede said.
“It is very important to listen to the partners on the ground, to the operators, the guests, the social media community, but you also have to make sure you execute the true DNA of the brand. For us going global, I would never claim to know the market the way an operator does. They live, they breathe it, they’re from there and I’m not,” said Briede.
At the brand 85% of menu items are set and 15% of the menu can be for innovation on the partner side.
That equation is very different from 2009 when the menu was extremely strict. The flexibility, over time, came as the result of the brand listening to its franchise partners.
“We know it [menu innovation] It is important to our partners and our number one goal is for our partners to make money so we are listening as part of that,” she said.
At Chick-fil-A, primarily a franchise model, it’s all about trust and sharing of goals and striving to accomplish, for both the brand and the franchisee.
“Regardless of whatever model you’re involved in it starts with a trusting relationship, starting out with a ‘hey what are your goals’ and ‘what are you trying to accomplish’ and let me share what ours are [corporate] and then figuring out how do you meet in the middle,” said Ohde.
“We really try to fuel this idea of how do we represent what now is an international brand but fuel local execution of that brand and local innovation of that brand. It really starts with building trust in that relationship and what really drives each party,” she added.
The brand has a philosophy at headquarters which Ohde used as example of its franchisor-franchise approach.
We say there are no registers [cash registers] at 5200 Buffington Road [HQ address] And if you aren’t selling chicken, which HQ doesn’t, you’d better be helping someone who is,” she said, adding that while the brand has tons of data, and data team members, none are as smart about franchise operations as operators and team members in the field.
“They uniquely understand what their customers know [and] what their communities need and want. [The middle ground] is about figuring out how do you meet them where they are so they can provide community needs and wants without breaking the brand promise. It is recognizing the brilliance that’s in the community [that] is paramount to us.”
Finding a middle ground is also much easier when a brand chooses the right partner for franchising, said Ohde. In 2021 the brand received franchise interest from 120,000 potential franchisees. It eventually chose 69 to walk the franchise path.
“At Chick-Fil-A our differentiator is our operator model, and it has very little to do with your credit but very much to do with your character. We want to go into business with someone who really becomes like our family so the selection process is all about their commitment to running that location and being a positive influence in that community. [middle ground with franchisees] takes care of itself.”
Taking community into account
For Bayoh, an IHOP franchisee and also founder of Cornbread, the middle ground with a franchisee is all about a shared love of community and a franchise location that reflects the community it serves.
Bayoh learned the value of attaining a middle ground as a franchisee very early in her franchise business career. Her first location, a store in Irvington, New Jersey, offered the typical brand menu, but it wasn’t what the local community wanted. So she innovated, with brand support, to put community food fare, specifically grits, on the menu, and sales popped.
“I fundamentally remember someone asking ‘do you all have grits’ and I said ‘no we don’t.’ They said, ‘why not,’ so I let the community I represent show up in the IHOP menu and went to IHOP and said ‘listen, breakfast in Irvington is not the same as Glendale California,'” she recalled.
Now the “soul food” portion of that store’s menu reflects 20% of the $400 million in revenue.
And just as importantly, the menu innovation drove loyalty.
“It made the community love what is a beloved brand even more.”
The franchisor-franchisee middle ground is about representation, in her view.
“One thing franchisors really have to understand is that representation matters in all faces and all shapes. I think that for as long as we can remember is what will bring us together. We always have to remember that people go into our stores wanting to see themselves and they want to know that someone thought about them.
Registration is now open for The Fast Casual Executive Summit, being held Oct. 9-11 in Indianapolis. Click here to register.