January 21, 2010
As the recession continues to pressure small business owners, some franchise owners are finding the restrictions placed on them by their franchisors are impairing their ability to compete. Several stories have cropped up in the news recently about franchise owners taking down their franchise signs in favor of going it alone.
In a recent story in the Dexter Leader, Sean Dalton reports that a couple who’ve operated the Dexter, MI Bear Claw Coffee since September, 2007 have gone independent, changing the name of their coffee shop to Corner Cup Café. Evidentally, franchisor and franchisee parted ways amiably; the agreement is undisclosed.
According to the Dexter Leader article:
The Horvaths were tight lipped about the details behind the parting of ways with the company that had impressed them so much initially, as part of an agreement between the two parties.
"We were just going in a different direction than they were … there had been some breakdowns in communication," Tracy Horvath said. "We wanted to go one path and they were heading in a different one."
…The Horvaths said they expect to have greater freedom in a partnership with [coffee distributor] Great Lakes Coffee. Coffee will be served in unique Great Lakes Coffee cups, but branding has been minimal and flexible, and the company has been "very willing to help every step of the way" without franchise restrictions….
The franchise owners cited that having the freedom to expand their food offerings and seating space that caused them to reject the restrictions put on them by the franchisor:
Being a Bear Claw franchisee, in contrast, involves bearing a copyright logo and name, carrying specific products and paying monthly royalties. Even signage for events was subject to Bear Claw approval.
"They were trying to keep their brand tight so they had control over it," Tracy said. "We are the only store that has a sit down sandwich section. The Bear Claw in Chelsea has a smaller sit down section, but they don’t serve any sandwiches, so you sit down and eat your Bear Claw and have your coffee and go.
"We’re more of a sit down, bring your laptop, get some work done, have some lunch, have a work meeting … it was a non-Bear Claw section of the store that the franchise did not approve of."
In the post Are More Franchisees De-branding, Going Independent?, UnhappyFranchisee.com recently reported on two hair stylists who bought their successful Great Clips hair salon and decided to debrand it and go independent. Their motivation was not only to avoid the Great Clips franchise fees, royalties and ad contributions, but also to gain the freedom to expand their products and salon services at their own discretion.
Will debranding be the next hot franchise trend?
One wonders if this may be a trend brought on by a tough economy and competitive pressure.
Some franchisees are getting frustrated by their inability to make what they believe are changes necessary to their own survival. On a recent post (CURVES: Can Indie Clubs Thrive Where Curves Failed?), a Curves franchise owner complained that the franchisor would not allow him to add treadmills despite the fact that nearly a quarter of his members stated (in writing) that they’d walk out the door and go to a competitor unless treadmills were added.
As increased pressure is put on franchisors to allow creative solutions, we may see franchisors getting more permissive and flexible with what they’ll allow… or we’ll see more franchisees trying to go independent so they can call their own shots.
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