[lbo-talk] Fast food, fast talk

shag carpet bomb shag at cleandraws.com
Fri Aug 30 04:00:20 PDT 2013


IIUC, the argument is that the reason why the profit margins are slim at the franchise level is that they pay a shitload in franchise fees. These franchise operations are in business to filter the money up. That's why, as I wrote years ago, you get theft - with managers part of the theft system - at the store level in a fast food restaurant. For small franchise units - single owner/one store (as opposed to franchise operations that own several) -- one of the enemies is, actually, "corporate."

I recently worked at a franchise operation, in their headquarters. A franchise operations actually treats their franchisees like their customers. They sell a business ownership dream to these people, some more savvy than others, and their goal is to serve _them_. All the money went into making franchise operators happy. They'd been sold something, so you had to make it right. In my case, it was the software to run the business - perform the service that they sold to customers. I was working on the software that consumers used: I might as well have been working in a cost center as they say in the business.

At any rate, the point about the fast food strike is that the target is the profits made when "corporate" sells the franchises everything they need to do business. Depending on the model, you buy everything from corporate: the food, the uniforms, the decor, the signs, equipment, software, cash registers, and you sign on for their marketing. When you run a campaign with whirlygigs you have to hand out, they charge you for that shit too. Of course, depends on the franchise operation as to the degree to which they force franchise operators to do this.

but you see the scheme is about extracting profits in these middle layers. Imagine the efficiencies involved if you actually got rid of that middle layer where you sell, at a profit, BK special sauce, burger patties, and bags of lettuce to franchisees who then turn around and try to sell, at a profit, the burger made of those ingredients.

OTOH, the current model sets up antagonism between franchise owners and "corporate." Corporate is seen as a kind of enemy for the small owners who have one or two stores. Almost in the way that middle management might snark about the C level executives: they're on the same side, sort of, but then again, they are also their bosses and often make them do stuff they don't want to do.

Same with the franchisees who see corporate as all about making a profit while trying to screw over the customers - the customers, in this case, are the franchise operators. Every month, when it comes time to write the check to "corporate" to pay your franchise fee, the savvy individual owner grumbles. Within the franchise system, you'll then have operators who occupy status levels based on how many stores they own. These guys can be really demanding with "corporate."



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