In an earlier blog post, we wrote about the benefits to franchisees in forming an association and outlined how to go about doing so.
Recently, a group of McDonald’s franchisees did just that. According to a recent article by Nancy Luna in Nation’s Restaurant News, more than 400 McDonald’s U.S.-based franchisees took steps to form an independent association. Luna reported that the group gathered in Tampa, Florida where they agreed to organize as a group to work together to address system-wide issues impacting their operations. Issues in the crosshairs included, among others, that these franchise operators wanted to take more control over menu pricing and heavy discounting. According to the franchisees, McDonald’s has been requiring aggressive discounting to boost traffic to the system’s restaurants. At issue for franchisees, who historically have had no say in when and whether they offer discounts, is the significant impact to their bottom line.
How did McDonald’s respond to this new development? Pretty well reports Luna, who wrote that McDonald’s response was to underscore that it is “committed to a constructive, collaborative dialogue” with its franchisees.
Is this possible? Well, yes. As we have discussed in the past, franchisee associations are not always formed to be adversarial. Indeed, it is a common misconception on the part of many franchisors and franchisees that independent franchisee associations are organized only when the members are seeking to engage in hostile and potentially litigious actions against the franchisor.
Rather, franchisee associations can be a vehicle for bringing about amicable and positive change in a franchise system. Of course, time will tell whether McDonald’s and its franchisees will amicably resolve their issues.
If you are a franchisee and there are problems in your franchise system, you are likely not alone. It’s no secret that there is strength in numbers. Working with your colleagues can bring change to the system overall.
If you are a franchisor, the formation of an independent group or association of franchisees does not necessarily mean trouble or litigation. It may be an opportunity for you to learn more about what is happening in your system from the franchisees’ perspective. A chance to address underlying issues and increase the profitability of your franchisees and you going forward.
Like the launch of any business, franchisees organizing an association should consult knowledgeable legal counsel. Similarly, franchisors facing the development of an independent franchisee association should consider retaining experienced franchise counselto guide them through the process. Still got questions? Feel free to email them to me, Julie Lusthaus at [email protected] and let’s talk.