In the franchisor-franchisee relationship, the franchisor provides marketing support in the form of promotions, brand identity, and back office functions. In return, the franchisee pays a kickback fee to the franchisor. Some franchisors like McDonald’s make their money off the rent of the land. Yes, McDonald’s Corporate is a landlord for all intents and purpose. Some franchisors like Subway make their money off the expansion fee. Nearly every franchisor requires its franchisees to purchase the ingredients from the franchisor either directly or from an approved provider.
What happens when franchisors become too zealous with the fees? In short, a mess. Quizno’s may need to rethink its strategy. If Quizno’s can beat back its legal problems, has the company harmed irrevocably its relationship with its franchisees?
Krispy Kreme has devolved into a four year financial joke. A whole wheat doughnut is the answer? Without franchisees, the franchisor does not exist.
18 responses so far ↓
lexib2 // March 1, 2007 at 10:45 am |
I think the Quiznos will definitely have quite the journey ahead of them in mending the relationships of franchisors with franchisees. If they have this many franchisees unhappy, they obviously need to change something quick. Since the franchisees are swimming in debt and hurting from all the outrageous fees, I think it’s only a matter of time before it goes full circle and the franchisors are stuck in a similar situation. For whatever reason, Quiznos is not as efficient as it should be, and if this problem goes unresolved for much longer, I feel that Quiznos will no longer be a market problem because it will cease to exist.
charlese1 // March 1, 2007 at 12:04 pm |
Franchisor’s are getting to be way too money hungry. These franchises will end up losing money and hurting their business by issuing out too many fees. In order for both the franchisees and franchisor’s to be successful, they need to be in a good relationship with each other. I think Crispy Cream will go bankrupt very soon. The franchise is losing trust with the franchisees due to suspicion of illegal activities. Franchisors need to give the franchisees a break so that both parties will be successful.
erich1 // March 1, 2007 at 12:06 pm |
The franchisee and franchisor relationship must be one involving trust and reliability. In the case of Quiznos, Mr. Baber, although his case as the article stated was extreme, took his life due to the pain and anguish corporate Quiznos caused him. If they continue to commit such acts, such as pocketing licensing fees, then they will lose the franchisees. With no franchisee there is no franchisor. This all leads more into the morals and ethics of business. Although there is always the gray area of what is right and wrong, this situation calls for a certain level of trust that is not being applied by those at Quiznos headquarters. Either they step up and get the job done or they will learn the hard way that sometimes a business relationship can be more valuable than money.
evaughan2 // March 1, 2007 at 12:40 pm |
My friends and I always talk about starting a franchise for Houston and bringing it up to Lubbock. When we talk about it, its always just like the money isn’t an issue and that everything would just fall perfectly into place, and we would be bringing in the big bucks. But after hearing about the Quizno’s ordeal (which I refuse to go to that place in the first place, because I don’t like it) it makes me think twice about our franchise dream. I believe that if Quizno’s doesn’t get their act together and acknowledge the issues with the franchisees, who bring in their money, and keep they business going, they will fail. The franchisees, who believe in the Franchise they are getting into are being let down and these people are also their customers. If they are stepping all over the little guy, who is going to carry on the Franchise? No one.
joseb1 // March 1, 2007 at 12:52 pm |
“Without franchisees, the franchisor does not exist.” I think this statement should be able to work both ways. Franchisors need to start paying more attenion to their franchisees before serious legal involvement may start to come into play. It is extremely traggic that the lack of support from a franchisor such as Quizno’s would cause someone to want to take their own life. On the other hand, there are franchisors out there who provide there counterparts with the materials and promotions needed to earn tremedous profits. For example, Bill Butler who is a local owner of a string of Subway’s and Ihop’s around Lubbock and San Angelo, Texas has been very successful in his workings. The franchisors have been able to provide him with the proper materials and promotioning for his stores. Now his biggest costs come from the low wages he has to pay out to his employees. Without the franchisor, Bill Butler might not have gotten to where he is now. I think that in order for all to be successful, the franchisee the franchisor must work together to achieve their similar goals.
troutknoxville // March 1, 2007 at 1:28 pm |
Franchises are something that could either make or break you. In Lubbock the Quizno’s on university and the loop recently close down due to bad performance and I think the owner went belly up. Now that location has a new positive owner and the place is always packed when I go. That just shows that if you have good management and positive employees; you can make money. One day maybe I would like to invest in a franchise, but if I was to invest in one it would have to be something new and fun. Do you know that it cost $500,000 to buy the Jason’s Deli franchise, and that doesn’t even include the building or land. So what I am trying to get to is that franchises are expensive, but you can make really good money if you choose the right one.
courtneys1 // March 1, 2007 at 2:55 pm |
Like evaughan2, I’ve always talked with my dad about starting a franchise, but after reading about Quizno’s, I think I might reconsider. I think it will take them a lot to come back from this kind of bad publicity. I’ve always liked Quizno’s and I’ve never seen any struggle with the ones from my hometown, but obviously the previous franchisor was just looking to make some fast cash without considering people at all. I know that I wouldn’t have 25,000 just to hand over and never see any kind of return on. I expect to see my money in good use. I think that franchisor’s need to stop being money hungry as charlese1 said. Yes I understand that the whole reason for a franchise is to make money, but just pocketing a licensing fee and doing nothing for them, and charging outrageous prices for supplies that you are only allowed to sell them is going a little far. I like McDonald’s idea of the landlord because thats steady money for them, and the franchisor will need to help the franchisee succeed so that they can still pay rent and so forth. It needs to be a relationship and partnership, instead of the franchisor getting their money and moving on.
kirkf1 // March 1, 2007 at 10:44 pm |
I definately agree that Quiznos has harmed their image and also relationships regarding franchisees. Quiznos needs an immediate overhaul of their dealing with franchisees in order to regain trust among each other. It is not that the$25,000 is an unreasonable amount but yet that once this money is in hand Quiznos seemingly takes a backseat to providing to their franchisees. This is just plain bad business no matter how you slice it. If corporate behavior such as this consists and stays in the news, there is no doubt Quiznos will be faced with many more problems that will slowly deteoriate this company into an unfavorable financial situation.
robertc1 // March 2, 2007 at 7:54 am |
When franchisers become too zealous with the fees it causes repercussions to the franchisees. For example when someone opens a franchise they have already put themselves out there. The franchisers are just hurting the franchisees with the excessive fees. The risktakers are the backbone of the American Spirit.
Quizno’s has not harmed the franchiser and franchisee relationship irrevocably. This is a country of second chances. If Quizno’s makes good with there franchisees they will be fine. Leave the past in the past.
A whole wheat doughnut is the answer. This was not the complete answer. The whole Krispy Kreme situation was bigger then just one item.
Without franchisees, the franchiser does not exist. This is a very true statement. The risk takers in our country is what We were build on. Capitalism at its best.
jeffo2 // March 2, 2007 at 11:46 am |
I think that franchisors should take it easy on franchises as far as fees are concerned. By setting ridiculous fees for franchisees to pay, they are really, in all actuality, destroying the relationship with the franchisee. I think that Quizno’s can recover from this and will continue to prosper. And as far as Krispy Kreme is concerned, I think that the same goes for them as well. A whole wheat donut would be wonderful, but I dont think that they need to change their entire marketing plan because of one menu change.
treyk1 // March 2, 2007 at 11:46 am |
I think that the franchisors do need to be careful not to be over zealous with their fees. While the Quizno’s case was extreme, I don’t think that a company is ever at a point where a relationship can’t be salvaged. It’s just a matter of the “higher-ups” making the right move to inspire the franchisee’s confidence in the franchisor again. I also think that Krispy Kreme’s whole wheat doughnut will be successful. As stupid as a “healthy” doughtnut sounds, that is just the kind of thing that the public eats up (pardon the pun). Everyone is dying of something and it’s not their fault, so now people that are fat because of doughnuts can claim they are dieting because it is a whole wheat doughnut.
amkyrish // March 2, 2007 at 1:25 pm |
What Quizno’s did will always cause there to be problems and issues between franchisors and franchisee’s. There cannot be a disregard for different levels of an organization because it wil cause those who being ignored to lash out and that can never be reversed. Money becames more important than anything else, and now that that thought has been presented as the way that this company does business, it will always be a concern for their franchisee’s. I think that Quizno’s has done its self an irreversible harm. As for Krispy Kreme and its attempts to recucitate it drowining financial issues, the idea of a whole wheat donut may fix some things for a little bit, but more things will have to be done because people will eventually grow weary of that trend to.
chrisc2 // March 2, 2007 at 3:04 pm |
I think Quizno’s can bounce back from this slump. It seems that they are trying to do the right thing; the problem is that if one person does something illegal and that person is a part of the franchising of the company, then depending on the severity of the issue, the company might get tagged with doing illegal activities. I think Quizno’s made a smart move by bringing in Gregory D. Brenneman. My dad works for Continental Airlines and they were one of the very few airlines that started turning a profit after 9/11 due largely in part by Mr. Brenneman’s strategy analysis. Quizno’s makes good food; a lot better for you than McDonalds (and look how successful they have been). So I think with some strategy, integrity and time Quizno’s can bounce back.
monicag1 // March 2, 2007 at 7:37 pm |
The numerous charges and fees that franchisors are charging to their franchisees are outstanding these days, especially in Quizno’s case. However, has one really ever stopped and thought about how great the food is or how consistent the taste is? Although I agree that these prices are inflated, the opportunity to buy products from one source is a huge advantage. For example, you can go just about anywhere in the world and have a Big Mac from McDonald’s and it will taste exactly the same!!! The fact that McDonald’s can do this is because it does buy all of its products from their franchisor. This puts franchisees at an advantage, creating a great reputation all around. Stop and think..maybe, the franchisee can not survive without the franchisor…???
wilsonh1 // March 2, 2007 at 11:08 pm |
When reading all the comments above I have seen “Without franchisees, the franchisor does not exist.”, as well as “Without franchisor, the franchisees does not exist.” I think McDonalds has done the best job making it: Without each other neither the franchisor nor the franchisee will exist. McDonalds doesn’t make any money unless the franchisee is around to pay rent to them every month. This gives them more of an interest and a relationship with each of their stores, and it appears that they are doing pretty well. On a different note, while I think many companies are charging an exorbitant price for their franchisees, they do deserve a pretty good amount of money. It was them who built this brand from nothing, just like any of us could do if we would like. They have invested a lot into their name, which owners pay to use. However, the co-dependency that McDonalds has established with its franchisees seems to be working out the best.
malloryg2 // March 3, 2007 at 4:17 pm |
I’m not clear on all of the issues dealing with legality concerning Quizno’s, but I do know a family from where I’m from that has just opened up a Quizno’s franchise in Grayson County (North Texas). They seem to be doing quite well, this may be due to the fact only that it is a small town without many “big” restaurants in it to begin with. Again, the questions concerning legal and financial problems aren’t too familiar … but I do think that becoming too greedy with fees could be a disaster with opening the franchise itself. A good relationship between the franchisor and franchisee is key, along with location, and good business policies conducted with the opening of a new franchise.
jalderson2 // March 7, 2007 at 2:28 pm |
Although I am not clear on Quizno’s franchising problems, I see and can undersand why they have nto been as successfull. A franchise is like a company and its franchisees are the employees. They make the image and create experinces that reflect back to Quiznos.co. Altough i see and understand they want consistency throughout all thier stores, they cannot hold such a firm grip on the stores. Quiznos is not a great company that has a big niche in the market, they are growing and need as much help and support from their franchisees.
chriss1 // March 8, 2007 at 9:44 am |
Quizno’s needs to do something quick with their turnaround. They definately need to change their franchisees attitudes about the company. Where they need to work on would be the affective attitude the franchisees have toward the way the franchisors are treating them with high food cost, and whatever else. Quizno’s needs to work on getting their franchisees and franchisors back on the same page and working together as one unit or a team in order to pull this company out of its metaphorical ditch. Quizno’s definately needs to work on the relationship between the franchisor and the franchisee, and the best way to do this is through trust, communication, and comprimise.
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