What does the franchisor do for franchisees?

The scene is the bar of a conference hotel in the central North Island. Banners at the entrance proclaim a welcome to delegates at the Roman's Roasters franchise conference. The sound of the franchise's well-known jingle is playing in the distance and buses will soon arrive to take the delegates off to an evening event. But the mood in the bar is sombre. The first meeting of the Roman's Roasters franchisee liberation group is well under way...

MATT:
Well, I don't know about you lot but I can tell you one thing: that new "bring a friend" promotion's never going to work in my store.

MARK:
Haven't your customers got any friends, then?

MATT:
No, Mark, they've got friends. More friends than our beloved franchisor, anyway. It's just that I won't be using it. "Two for one", eh? What's that going to do for my food costs? Our margins have been declining all year, a block of cheese costs more than a bar of gold and they want me to give it away? The answer to that's a Tui - Yeah right. I tell you what, this lot are totally out of touch with us franchisees. We should take down the signs and go it alone.

ALL:
Murmurs of approval

MATT:
They sit up there in their head office thinking up bright schemes that never work, send out the occasional fresh-faced junior who's never actually run a business of their own to tell us what to do, then if we get in strife and miss a royalty payment they tell us we're in breach of our franchise agreements.

ALL:
Yes, that's true

MATT:
They bleed us white. They take their royalties from our turnover and we're left with whatever profit we can scrape out of their leavings. What I want to know is, what have they ever given us in return?

LUKE:
The name?

MATT:
What?

WAYNE:
They gave us the name, the trademark. Roman's Roasters. My kids love the brand. When they knew we were buying a Roman's Roasters franchise they were so excited they told all their friends. And all their friends turned up in opening week, and their mums and dads and grans, too.

MATT:
Oh. Yeah, yeah. They did give us the name, that's true. Yeah.

MARK:
And the training.

SUE (MATT's WIFE):
Oh, yes, the training, Matt. Remember before we bought the franchise? You couldn't even barbecue a pre-cooked sausage without poisoning someone and now you feed 80 people in a lunchtime and think nothing of it.

MATT:
Don't tell everyone. All right. I'll grant you the name and the training are two things that the franchisor gave us - but that's about it. And we paid for that right back at the beginning, along with the fit-out and the equipment and everything else. Ever since, the franchisor's been taking a percentage of our hard work and giving us nothing in return.

JOHN:
There's the systems.

MATT:
Well, yeah. Obviously the systems. I mean, the systems go without saying, don't they? But apart from the name, the training and the systems... what has Roman's ever done for us?

JOHN:
Buying power.

PETER:
Product development.

DIANA:
Computer systems.

PAUL:
Support. That new field support girl might not have run her own store but she knows her stuff. She'd spotted that our power usage was way above the average and we were able to narrow it down to a faulty freezer unit. She also suggested a new layout for the drinks fridge that's increased the sales of higher margin products.

JOHN:
Oh, is that the one they trialled at our second store? Took a while to get it right but they said once it worked they were going to tell everyone to use it.

MATT:
Yeah, yeah. All right. Fair enough.

WAYNE:
And the research.

MARK:
Oh, yes. Remember when everyone was going on about healthy food and our lot came up with the new Roast Wraps and all the stats about how it was a low-fat way of cooking? It was all over the press for a while with that photo of the Minister of Health visiting the kitchens. We'd never have got that on our own.

WAYNE:
And the advertising.

FRANK:
Yeah, that's something we'd really miss, Matt, if we weren't part of the franchise. I remember when I was part of the Big Whiteware buying group. We bought stuff together when we wanted to but all the stores had their own names. We were ‘proudly independent' - that was our slogan!

WAYNE:
Whatever happened to Big Whiteware?

FRANK:
It fell apart. Most of them have shut down now - there's still one in Dannevirke, I think. Everyone sold different stuff with different pricing, different offers, we could never agree on anything but an annual sale catalogue with ‘not all items available in all stores' stamp on it. The Commerce Commission got us over that. At least with Roman's Roasters, you know what you're going to be promoting, what price you'll be paying, what you'll be selling it for and you'll have all that advertising behind you.

MATT:
Advertising which we pay for! Another 3% on top of the royalty.

FRANK:
Which is added to my 3% and Luke's 3% and John's 3% and so on - it makes up quite a whack, doesn't it? I'd never afford TV advertising on my own

MATT:
All right, but apart from the name, the training, the systems, the buying power, public order, the support, new products, computer systems, joint promotions and advertising, what has Roman's ever done for us?

GRANT:
Got us into business?

MATT:
What? I could run this business with one arm tied behind my back.

GRANT:
Yeah, you could now, Matthew. But what about when you started? You were a bank manager, weren't you?

MATT:
What of it?

GRANT:
You were a bank manager, I was a salesman, Catherine was a nurse, John worked for the council. Let's face it, we knew stuff-all about the food business - what to sell, how to prepare it, how to recruit and train staff, portion control, benchmarking - even choosing the right sites and negotiating rents. I don't know about you, Matthew, but I'd have failed within a year if it hadn't been for the support from Roman's.

ALL:
(Murmurs) That's true.

GRANT:
And don't forget, they had to learn all that themselves originally - Roman himself says it took him three years before he started making a profit, and another six years before he'd got everything systemised and ready to franchise. How long did it take you to reach break-even, Matthew?

MATT:
(grudgingly) About six months.

GRANT:
Makes you think, doesn't it?

(enter Roman Barolo, founder and CEO of Roman's Roasters)

ROMAN:
Sounds like a spirited exchange of ideas going on in here.

MATT:
We were just talking about what we get for our franchise fees.

ROMAN:
Not enough, eh?

MATT:
Er, well, I wouldn't say that, exactly.

ROMAN:
Look guys, I know that it hasn't been an easy year for any of us. What's happened on food prices has been pretty tough and I don't think any of us expected the fuel hikes. And now those are improving we've got the credit crunch. You were a banker, Matt, I guess you didn't see that coming, either?

MATT:
People have been talking about a slow-down for ages.

ROMAN:
And that's why we brought in the Value-for-Money programme at the start of the year. We've analysed every single cost and looked for savings and we've looked for ways of increasing sales, too. We've compared the figures that every store is achieving, and tomorrow we're going to ask some of you to share your results. We've renegotiated with suppliers, too - we've opened four new stores this year and that's helped keep the price increases a bit more reasonable, and some have got more flexible on terms, too.

MATT:
Still squeezing our margins, though, isn't it?

ROMAN:
Of course. Everybody's margins are squeezed at the moment. But I tell you what. When this is over, Roman's Roasters is going to be stronger than ever. The competition's dropping off, independents are going out of business and I've just heard that that new US chain that was going to open here has cancelled its plans for New Zealand. Our customers are going to be more loyal than ever because they know they can trust Roman's to give them good healthy food at a fair price. That's why we're going on advertising. When people start spending up again, you'll all be getting a bigger share.

ALL:
(Murmurs of agreement)

ROMAN:
But for now, we know you need practical ideas - that's why we've got Colin Pearce running workshops on add-on selling tomorrow. One franchisee he helped made $100,000 extra profit in just one year by using what he taught - and he's funny, too.

WAYNE:
A mate in Australia heard him a couple of years back - said he'd never heard a guy talk so much common sense before and it really worked.

ROMAN:
And there's one other thing I wanted to discuss with everyone tomorrow. Look guys, we think we do a good job but we know we don't have a monopoly on good ideas and you have so much experience - not just in running a Roman's but in all your previous careers, too. The intranet's been a pretty good way of sharing ideas and experiences, but I want to set up a proper Franchise Advisory Council so that we can all make sure we understand the issues and make the right responses. Sound sensible?

ALL:
Good idea. About time. I'd be in for that. Sounds great, etc.

ROMAN:
And Matt, I hope you put yourself up to be on it. With all your experience and your financial background, we'd all value your opinion. Now's the time to be focused on putting the effort into what really works.

MATT:
Oh, er, thanks, Roman. I'd be delighted.

ROMAN:
After all, I'm sure you all want to know...

ALL:
(shouting) What can Roman's do for us?

We welcome links from other websites to this article. Please note that this article is copyright © Eden Exchange NZ Holdings Limited, Franchise New Zealand magazine and Franchise New Zealand On Line. While it may be downloaded for personal use, no part may be reproduced on any other website, in electronic or printed form or in any other form whatsoever.