Franchise Update Magazine Issue III, 2013 | Page 70

FLN FranchiseLAW
By Samuel G. Wieczorek and Michael R. Daigle

Reducing Resistance to System Changes

P

icture this: You’re a restaurant
franchisor with a well-known
brand and two day parts, lunch
and dinner. Despite your famous hamburgers and fries,
you’ve seen a decline in average unit
sales. Consultants and market studies indicate that your competitors are
experiencing significant sales growth
during breakfast hours, so you’ve had
your talented chefs develop a delicious
new breakfast menu. To counter the
sales slump, you want your franchisees
to offer the new breakfast menu, but
it will require that they purchase new
equipment and hire more staff for the
expanded operating hours. Franchisees
are grumbling.
One of the core advantages of a franchise system is the franchisees’ ability
to associate with a well-known brand
and to leverage the brand’s goodwill
that derives from a consistent customer
experience across all units. To maintain
consistency, franchisors demand compliance with uniform system standards.
But what happens when changing consumer preferences or being in front of
consumer trends requires changes to the
system? Reasonable franchisees will certainly understand that minor changes are
necessary as systems and brands evolve.
However, if system changes are frequent,
unpredictable, or require large capital
expenditures or substantial operational
changes, the franchisor’s challenge becomes more difficult. What can franchisors do to reduce franchisee pushback?
Two examples
Despite a clear right under its franchise
agreements, the La Quinta hotel