The Problem of Lack of Rightful Services for Franchisee from HQ
One of most vital and important things franchisees pay for through their initial licensing fee and monthly royalties is services and support from their respective Franchisor HQ. Franchisor HQ support is vital to the success of any franchisee, by way of marketing material, training both initial and on-going, positive press coverage, guidance to franchisees when an operational problem arises, problems with food purveyors, recipes development, recipe problems/question, product questions, additional product & service development, website support & development, the list goes on.
What started to happen in the Meal Assembly industry is, as the store–owners closed their doors, due to lack of business, royalties decreased to HQ. Lay-offs at the corporate office of key positions resulted, positions such as, recipe development, trainers/mentors, liaison positions that serve as a vital human link between the HQ leadership and the store-owner and marketing positions. They just ceased to exist. In my franchisor’s HQ (Supper Thyme USA) the staff count went from 7 down to 2 in a matter of months. This was due to massive store closures in a short amount of time. This cut back has happened in Dream Dinners and other Meal Assembly companies as well.
Store-owners are left in the unenviable position of handling many problems, including vital operational problems themselves, problems that traditionally are best handled by trained corporate employees. When this happens, how is it possible for an HQ to fulfill its contractual obligation of support to its franchisee/store owners? It isn’t…although; to date no Meal Assembly HQ has seen it necessary to decrease the required royalty payments extracted from franchisee as a “give-back” to its franchisees even though the services and support available to franchisees have been drastically cut. When asked by franchisees, the Franchisors decline the request of a reduction or cessation of royalty payments until the store owners can reach a ‘break even” position, as several Supper Thyme franchisees found out. Are franchisees getting their money’s worth? Ask any franchisee and you will hear a resounding NO!
When corporate lay-offs occur, communication between storeowners and HQ breaks down. Two-way communication between a frantic franchisee and HQ becomes very difficult to non-existent as the remaining HQ staff members scramble to try to fill vacant jobs and answer questions that they are not trained to handle. Phone calls and emails about urgent matters from franchisees to HQ go left unanswered.
What makes this difficult aside from the fact that franchisees were promised and pay for that support through their royalty payments, is that it leaves the franchisees out in the marketplace with no support from HQ staff that has been trained to handle their day- to day-operational problems. This places unnecessary stress on storeowners who are already balls to the wall stressed to the max. Storeowners are left to solve problems that can only be taken care of, in most cases, by a corporate staff member that has been trained to help solve that particular problem when it arises. It also makes it nearly impossible to get an issue taken care of in a timely fashion for the storeowners. Customer service at the local level begins to suffer, sales in turn suffer and in the end, many stores have to close.
However, more important and rarely talked about is the Franchisors failure to its main consumer-the franchisee. The consumers in the Franchisor/franchisee relationship are getting much less than what they paid for with no means of redress.