In the world of franchising, culture is king. More than any other business model, franchises rely on organisational culture as their secret weapon to drive success.
They treat culture as the cornerstone of their competitive advantage and growth strategy. Some years ago, I was a team leader in a Global Franchising Best Practice Study Tour organised by Fletcher Building. We noted that McDonald’s corporate leaders frequently referred to ‘McFamily’ and Caterpillar claimed their dealers ‘bleed yellow blood’.
A franchise’s culture is something you either get, or you don’t. Burger King’s New Zealand master franchisee bought Hell Pizza, a home-grown franchise that had become New Zealand’s largest pizza chain after Domino’s and Pizza Hut. But after a few years they realised they were the wrong fit for Hell Pizza’s quirky out-there culture and sold it back to the original owners for around one-fifth of the price they’d paid.
But franchise culture doesn't have to be quirky to be successful. US fast food giant Chik-fil-A has embued its franchisees with a mission to give its customers a better experience with fast food. It has made kindness a differentiator. As a result, Chik-fil-A enjoys the highest per-store sales of any comparable fast-food franchise and has to turn away hundreds of applications from hopeful would-be franchisees every year.
There’s a lesson here for franchisors: It always comes back to people.
As management guru Peter Drucker famously said, ‘Culture eats strategy for breakfast’. The values, beliefs, and behaviors that make up a franchise’s culture set the tone for how franchisees conduct business and interact with customers.
Unlike company-owned chains which are highly centralised, franchises are decentralised with each franchise independently owned and operated. This means headquarters has limited control over day-to-day operations. Franchise culture serves as the glue that keeps the franchise brand experience consistent across hundreds or thousands of locations.
Strong cultures allow franchises to align franchisees to shared goals and values. This enables new products, services, systems and other innovations to be more smoothly implemented and operated, even without direct oversight. Consistent training and enculturation ensures franchisees embrace the brand identity rather than solely chasing profits.
Because franchisees are independent business owners, they have a vested interest in the success of the franchise as a whole and, if the culture is right, are more likely to perform at a higher level than employees. They are also more likely to come up with ideas for new products and business improvements, as McDonald’s found when franchisees — not corporate office — came up with the Big Mac and Filet-o-fish, two of the franchise’s best-selling burgers.
While the benefits of a strong organisational culture in franchising are clear, creating and maintaining this culture is a challenging task. Having managed and owned as well as consulted to franchises, I have particular experience in developing strong franchise cultures and will be exploring the what’s and how’s of culture development in my free email newsletter.
I also offer a free Initial Consultation for franchisors looking for specific advice and assistance.
