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michael webster's picture

ACBF Value?

And what were the franchisees supposed to receive for their $240 a year?

RichardSolomon's picture

X-Board Member hit the nail on the head. By the time there is

sufficient militancy to consider execution of an association plan the financial condition of the potential members has eroded to the extent that it is not sustainable. The result is an impotent social group with officers and directors and an interactive website from which the franchisor can keep track of everything that transpires - all terrible things to do and guarantors of easy retaliation by a reluctat franchisor. See http://www.franchiseremedies.com/wolves_sheep_so_few_effective_independent_franchisee.htm .

The independent franchisee association is the Sun-Tzu road to leveling the  table. That takes more than Robert's Rules of Order.

Polite "lets all get along and have a win win situation" is fantasy in almost every instance. After a lot of agony over many years a very few systems have reationalized the franchisor - franchisee relationship. Usually they are stomped on like bugs.

With all due respect Mr. Webster - ACBF Association of Candy Bou

With all due respect Mr. Webster - ACBF Association of Candy Bouquet Franchisees failed due to the lack of franchisee financial support. Many wanted to join but not support the annual $240.00 dues even when they were offered monthly payments of $20.00. Many franchisees felt they could not afford the fee associated.

An X-Board Member

RichardSolomon's picture

I only occasionally see franchisig through a contract lens.

Most of the time I am looking for another way to deal with what has to be dealt with - a field of battle where my skills in conflict may be put to use and it ay be the other folks on the other side who have to worry a bit.

Since the contract is the game franchcisors want to play, it is better to find another game that is played on a field with a better tilt.

michael webster's picture

Woof!

Thanks for the kind words, Richard.

michael webster's picture

Voices and Dogs

Don writes: "Michael can be a voice in the wilderness or he can welcome evidence from a budding professor at the prestigious Cornell School of Hotel Administration that he's been right. I suspect he will choose the latter."

Uh no.  There is no evidence in Ben and Patrick's paper - there are simply conversations.  And there is nothing wrong with that type of approach.  But, having listened to those conversations for many years, they don't produce the type systemic guidance that most are interested in.

For there to be a breakthrough, someone has to explictly address the biggest economic myth of franchising: franchising is the cloning of business success.  There is no evidence to support this view, and much evidence against it.

Once we understand the relatively gappiness of what the franchisor can, should and will deliver, then the economic need for an independent franchisee association and large scale co-op becomes clear.  (Co-ops themselves are interesting because they have similar problems to franchisors - compliance with the co-op program.)

But, most economists - if and when they do look at franchising- see a very limited picture.  They simply don't understand the role of standard and confuse it with uniformity of menu.  There is no explict understanding of franchisor opportunism.

The ordinary franchisor executive confuses scale, network effects, and platform effects and so is a completely unreliable economic historian of his or her own success.

Franchise attorneys are equally hopeless - looking at the franchise system always through the lens of contract.

michael webster's picture

Lawrence on IndFA's

Introduction

Ben's paper, which is unfortunately gated, does raise some important issues.  Ben was kind enough to send me a pre-print.  

This is very important research and I am glad to see Ben and Patrick take on issues that have been neglected by academcis. There is no corresponding "Theory of the Firm", which needs to be remedied. 

Like Peter Birkeland's excellent sociological text, Ben and Patrick are interested investigating beyond the traditional academic questions about franchising.

They write: "Because some independent franchisee associations endure while others fail, we ask the following questions: what characteristics give rise, and sustenance, to these organizations and how do these organizations manage the inherent tension between cooperation and conflict?"

Critcial Remarks

The paper suffers the usual problem when the data is interviews from association board members and leaders.  It is easy, ratther too easy, to constructive a narrative that confirms the author's favorite, perhaps unstated, social group theory.  

I would have liked to seen the authors compare those franchise systems which have both franchisee owned and operated buying co-ops with those systems which only have a franchisee associations.  This would have been a better way to investigate how the tensions between cooperation and conflict are managed.  Franchisees and franchisor decision makers have to be problem solvers within the co-op, which may assist in managing conflicts elsewhere.

The authors do not to appear to have access to either the YUM brands co-ops or McDonalds, which limits their focus.  

However, despite these flaws, the authors make an extremely important point.  Unlike the public firm, in which the shareholders may leave at any minute as compared to then tenure of management, in franchising this relationship is reversed:

"A maturing US franchise industry has resulted in an environment where an increasing number of franchisees work in franchise systems that are owned by large corporations or private equity groups with high levels of turnover among management. Many of the multi-generational franchisees we encountered in these systems perceive their relationship with the brand as more enduring than those of the current owner or management team."

This is an important insight, and has been the foundation for a number of successful associations.  Indeed, I would venture that without this, an association will have a very difficult time and may never gain a foothold.

Specific Responses to the Article

Ben says: "When you look at start-up franchisee associations like [now defunct] Curves or Candy Bouquet, one of the challenges they face is that they have very limited financial resources. "

No, Curves was very well funded. Candy Bouquet failed because it was largely a mass divorce looking to happen.  

Funding is a simple problem. There are a number of ways to solve the funding problem, all of them relatively straightforward applications of critical mass theory, or n-sided platform theory.

But an association fails largely because of the indifference of the franchisee community.  New franchisee associations want to be "recognized" by the franchisor. This is pointless and leads nowhere -unless some bargaining dynamic was established via litigation. A new association has to first find acceptance from the franchisees that it is performing a legitimate function, worthy of support. The Curves association failed this test.

Ben also says: "Many older groups have stronger associations simply because the franchisees have been there longer and have had longer to bond together. In some cases, franchisees have passed down their franchise to second and third generations. It's much easier to develop a social structure when my son and your son had a relationship when they were kids, and now they are franchisees.

I agree with this observation, though as the Kentucky Fried franchisees have found out, this bond doesn't make your marketing any better.

Ben on Coldstone and Toasted Sub: "one that is too radical in its constant opposition to the franchise system, it will not be able to survive long term. It is very hard to transition to the right balance when either type of polarized identity is developed."

This is harder to assess. Toasted Sub never provided to Quizno's operators anything of economic value that could be used to improve the unit economics. There was simply no need to pay for a gripe board or forum. The result of the Coldstone Franchisee Association is unclear at this point.  

Conclusion

All in all, this paper is an important contribution to the sociology of franchisee groups within a franchise system. However, the authors need investigate some well known corporate decision making theories and place them in the context of franchising, if they want to go beyond the conversations that they have collected.   

In particular, a contrast and comparison between the collective actions of unions, professional and non professional would be useful.  A more franchise centric model of balance - between cooperation and confrontation- would also be useful.  

Finally, explict reference to modern theories of negotiation within the framework of conflicting goals established by Gillian Hadfield would be helpful to delineate constructive oppostion from mere truculence.  I

Ray Borradale's picture

Fresh eyes

I cannot see the point in disqualifying or demeaning anyone’s constructive input on any franchising topic and obviously Lawrence has had a lengthy focus on what is an important element of franchising.

5 comments and none about the topic. I suspect Michael may agree on most points.

RichardSolomon's picture

Webster has been laboring in this vineyard for over 15 years.

Lawrence got his "Ph.D." in 2009. Readin aint doin.

Mr. Blue MauMau's picture

Lead dog

There can only be one lead dog and Webster is it. — Richard Solomon

I'm glad I'm a fish.

RichardSolomon's picture

Doctor Lawrence could claim to be beholden to Mike Webster if

he were intellectually honest. But to go on like that as though he were the lead dog is just ridiculous. There can only be one lead dog and Webster is it.

Mr. Blue MauMau's picture

Dr. Webster is indeed an IndFA expert

Richard: Dr. Michael Webster is indeed an independent franchisee association (IndFA) expert. However, I like Dr. Ben Lawrence's scholarship and so do many other franchisee association leaders whom I have spoken with. I think Webster values it too, particularly when they back up many of the things that he for years has advocated.

For one, Webster criticizes franchisee associations for not having a website like Dunkin' Donuts Independent Franchise Owners or the International Association of Franchisees and Dealers does. He advocates communicating news to not only franchisees but also to non-members / the public. He is also a big proponent of frequent e-newsletters. Try talking to him about the subject one day if you have a few hours to spare. Webster also speaks of the importance of funding franchisee associations through vendors. He says he has an association model built around that very concept. And he has said that regional groups are a more organic way for franchisee associations to start.

Michael can be a voice in the wilderness or he can welcome evidence from a budding professor at the prestigious Cornell School of Hotel Administration that he's been right. I suspect he will choose the latter.

This is a new field of study in a land that has so many false business myths. I think most will welcome scholarly contributions. I know that Lawrence spent considerable time interviewing and understanding the leaders of many independent franchisee associations. He was able to speak with associations that not even I have been successful in speaking with.

RichardSolomon's picture

Doctor Lawrence needs to meet our Doctor Mike Webster who

is the leading authority on franchisee associations, no matter what Doctor Lawrence may say about his own self.

Studying about franchisee associations is not the same or remotely equivalent to actually doing them. Mike Webster is doing them in what is and will more and more become the real answer to how this should be managed.

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