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This is a stretch. The corporate office may or may not have the contractual ability to intervene; they can't just cancel franchisees because they feel like it.

This is a stretch. The corporate office may or may not have the contractual ability to intervene; they can't just cancel franchisees because they feel like it. More importantly, it's up to journalists and even randos on HN to avoid trying to confuse the relationships involved. If some McD's manager said something stupid and offensive, we can't indict the whole chain. Individual humans have agency.

greedo 5y ago
The parent company doesn't get a blank check though. That's the risk with franchising. Some franchisee may do something stupid and it reflects poorly on the parent. That's why most franchise agreements are very one-sided. Here's a perfect example of how a franchisor can play hardball. I worked for a McD's that was a dominant store in our region. Located right off the Interstate and got tons of consistent traffic. Just an excellent, very profitable store. But our owner/operator was a dick to Corporate. So they opened a new store at the next offramp. "Offered" it to our operator, but the terms were ridiculous, so he passed on it. Found someone to take it, and we dropped 30% in sales. Back in the 80's that cost our owner $80K in lost PROFIT. He was pissed.
hinkley 5y ago
Probably depends on the franchise. I know the one I worked for in high school seemed unusually obsessed with the notion that a secret shopper from corporate would catch us on a bad day and they never went into what the consequences of such a thing were. As some franchises also involve loans, if they don't like how you're running your store they can call in your loans. I'm not saying you have to close, but unless you know where a sunken treasure is, good luck avoiding bankruptcy.
a4isms 5y ago
No, they may not have the contractual opportunity to intervene, just as if I leave a location on unfavourable terms, I may not be able to compel the landlord to solve a noxious odour smell. But that's the risk I willingly take when I negotiate that lease. And where franchises are concerned, I have little empathy for the franchisor. They chose franchising as a business model for its advantages, such as making franchisees finance their growth, and having a captive market for products and services they compel the franchisees to resell. I think when you choose to be a franchisor, you're willingly accepting the inherent tradeoff of growth in exchange for the risk that your reputation and brand will suffer if franchisees behave badly. I'm sure Ford isn't happy that some of its independent dealers take a hot seller like the new Bronco and mark it up $10,000 or $20,000 above MSRP for customers who ordered one thinking they'd pay MSRP. But the headlines in the newspapers rarely say "Reggie's Westchester Ford-Lincoln is ripping customers off," the headlines say "Ford Dealers are ripping customers off," and the public rarely gives a lot of thought as to whether Ford can do anything about it, they think, "Ford ought to do something about it."

greedo 5y ago

The parent company doesn't get a blank check though. That's the risk with franchising. Some franchisee may do something stupid and it reflects poorly on the parent. That's why most franchise agreements are very one-sided. Here's a perfect example of how a franchisor can play hardball. I worked for a McD's that was a dominant store in our region. Located right off the Interstate and got tons of consistent traffic. Just an excellent, very profitable store. But our owner/operator was a dick to Corporate. So they opened a new store at the next offramp. "Offered" it to our operator, but the terms were ridiculous, so he passed on it. Found someone to take it, and we dropped 30% in sales. Back in the 80's that cost our owner $80K in lost PROFIT. He was pissed.

hinkley 5y ago

Probably depends on the franchise. I know the one I worked for in high school seemed unusually obsessed with the notion that a secret shopper from corporate would catch us on a bad day and they never went into what the consequences of such a thing were. As some franchises also involve loans, if they don't like how you're running your store they can call in your loans. I'm not saying you have to close, but unless you know where a sunken treasure is, good luck avoiding bankruptcy.

a4isms 5y ago

No, they may not have the contractual opportunity to intervene, just as if I leave a location on unfavourable terms, I may not be able to compel the landlord to solve a noxious odour smell. But that's the risk I willingly take when I negotiate that lease. And where franchises are concerned, I have little empathy for the franchisor. They chose franchising as a business model for its advantages, such as making franchisees finance their growth, and having a captive market for products and services they compel the franchisees to resell. I think when you choose to be a franchisor, you're willingly accepting the inherent tradeoff of growth in exchange for the risk that your reputation and brand will suffer if franchisees behave badly. I'm sure Ford isn't happy that some of its independent dealers take a hot seller like the new Bronco and mark it up $10,000 or $20,000 above MSRP for customers who ordered one thinking they'd pay MSRP. But the headlines in the newspapers rarely say "Reggie's Westchester Ford-Lincoln is ripping customers off," the headlines say "Ford Dealers are ripping customers off," and the public rarely gives a lot of thought as to whether Ford can do anything about it, they think, "Ford ought to do something about it."