Running a successful franchised restaurant
So says Steve Hansen at Chooks Fresh & Tasty chicken franchise, dedicated to serving up barbecued and fried chicken. "Many franchisees have a small parameter in terms of choosing what food they serve and where they source their products as the products they serve are usually uniform across all stores."
The brand's franchisees do not have to choose their products or source a supplier as such arrangements are already in place for them. "Every ingredient and item needed to produce the products promoted on our menu boards is delivered direct to the franchisee." For most supply chains it is not difficult, he says, when the majority of the franchise group uses similar products such as bread, chicken, chips and soft drinks. But he reveals problems can arise when the supply of foods such as salads, coleslaw, lettuce or bananas are short or inconsistent.
Turning to local suppliers can be the answer at such times. So what guidance given or restrictions placed on purchasing catering equipment and supplies?
Chooks for instance provides a turnkey solution for its franchisees. This means each store is built, set up and stocked when new franchisees take over.
"All equipment is sourced through existing suppliers and we use equipment we know works because we choose items that our franchisees have previously used, been happy with and have found reliable. The use of the same equipment in all our franchise stores also provides consistency for our franchise group."
One advantage of this is that the support team understand and can advise on the equipment whenever a problem arises. But it is a different matter when it comes to food. The franchisor does not restrict franchisees to purchasing from a particular supplier but insists the specifications of all products stay consistent throughout all stores.
"We suggest to our franchisees that if they are able to source a better price for a product or a better deal from any supplier they should try to obtain the same deal for the entire franchise group and always ensure it can be sustained long-term. We encourage our franchisees to always think of their fellow franchisees and see that the one off offer from a small distributor should be an offer that is beneficial to everyone in the franchise group."
But how can a franchisee be sure they are getting the best product at the best price?
If a franchisee is free to test other products in the marketplace at anytime, there can be no doubt of the value of the item, suggests Hansen. The details of any better deal arranged through an alternate supplier are passed on for the current supplier to try and match.
"We understand that although the cost of supply is an. important factor, we also take into consideration keeping to good, long term relationships we maintain with our suppliers. This attitude has put us in a win–win situation where all parties involved benefit from the relationship," says Hansen.
Certainly relationship building is one element of the equation. With just one eat-in restaurant in Adelaide, take away franchise Crust Gourmet Pizza is predominantly a take-away concern. Since it was first established in 2001, the company has been continuously researching most of the major suppliers in Australia to develop solid and reliable relationships, says founder and managing director Costa Anastasiadis.
"The suppliers that are on our Approved Suppliers List are the ones that we have found to be most consistent in reliability for our franchisees and costs."
The coffee house and bakery business, Banjo's , aims to supply franchisees at the lowest possible cost, says national operations manager, Anthony Netting. And yes, like other franchises, there are times when approved supplier rebates are provided. This can be a sticky subject for franchisees – who is getting the benefit here, the franchisee or the franchisor?
Banjo's takes a transparent approach to any such arrangements with its franchisees, Netting says.
At Bucking Bull , the carvery franchise priding itself on an old-fashioned roast, supplier rebates are used to provide franchisees with ongoing marketing support to develop the brand as well as the provision of promotional and point of sale material, assures managing director, Stuart Beechen.
Nando's too invests its infrequent supplier rebate to directly benefit the franchisees, says Justin Monaghan, marketing manager of the brand famous for its flame-grilled peri-peri chicken dished up in a casual dining environment.
Shifting from the preferred supplier is a challenge for any organization, and each regards its supply chain as integral to serving up high standards.
"Due to the specific equipment requirements and the unique nature of our fresh food, Nando's franchisees only utilise those suppliers who are confirmed as able to meet Nando's specifications," says Monaghan.
Approved suppliers and approved products are in place to ensure a very high level of consistency. Yet any Banjo's franchisee wanting to suggest changes to the supply chain can forward information to two committees: the R& D and Franchise Advisory Committee. It's the same for fresh menu ideas. The system allows franchisees to sell both mandatory and optional menu items. A monthly committee meeting will review any changes to the menu in conjunction with the company's marketing department.
Bucking Bull's franchise support office will consider any suggested menu changes, conduct a trial with the franchisee in question, then evaluate the impact. Suggestions will be acted on if it is thought appropriate for the franchise network.
Over at Nando's, frequent interaction with franchisees through various forums – both formal and informal – allows for franchisee suggestions to be aired, including ways to improve either the supply chain or the menu.
Yet what happens if franchisees have a problem with a supplier, late deliveries for instance?
As a franchise organisation grows you need to ensure you have the right supplier in place to ensure your supply chain is adequate for the needs of your franchise group, Hansen suggests.
"We are extremely reluctant to change suppliers particularly since we always put in the time and effort to build strong relationships with everyone we work with. Usually good communication and discussion of any problems has provided a good working solution for us and our existing suppliers.
"In the past as we have grown we have had to changesuppliers a few times to ensure the supplier can keep up with our growth. We have only changed suppliers when they have not been able to keep up with the demand we have."
Nevertheless, problems do happen and at Chooks a strict procedure is in place to deal with this. Franchisees are the first contact with the supplier; if the problem is not resolved the issue goes further up the chain of command.
If a Bucking Bull franchisee has problems with their delivery or supply that they cannot resolve a franchise support manager will assist them to negotiate with the supplier to resolve the problem. The same goes at Banjo's.
"They firstly contact the approved supplier to try to rectify the problem. If this does not provide resolution, they are then encouraged to contact Banjo's head office and advise the national operations manager who will remedy the problem," explains Netting.
Because Nando's franchisees deal directly with suppliers and not through the franchisor, direct communication is the solution, says Monaghan. However, the franchisor will regularly be involved to both assist the franchisee and to ensure that the problem does not become systemic, he assures.
Hansen throws the problem back at franchisees. He believes late deliveries are not usually a problem if the ordering procedures are followed.
"We advise our franchisees to order stock so it arrives the day before it is used. If delays occur our suppliers will usually advise us and the message will be communicated to the franchise group so all franchisees are aware of the problem and how it is being handled."
At Nando's, as a new franchisee becomes more attuned to the needs of his or her particular restaurant, typically the franchisee will adjust ordering methods to achieve the optimal balance between supply and demand.
Crust's Anastasiadis says, "We have quite a few franchisees who are well established and very independent, but have not experienced any issues regarding supply of stock for these franchisees. Our franchisees appreciate the support that is available to them from head office, and that we are there to help them deal with any issues so they don't have to sort things out on their own."
Beechen agrees that those franchisees who have worked with the system for some time appreciate the back-up provided.
"Established franchisees who have worked with the franchise support office in making changes to the supply system understand the benefits of a group approach to tackling any supply problems.
"Supply issues are more likely to arise with newer franchisees who may take a short term view in respect of their own business without considering the longer term implications or impact on other franchisees and the maintenance of the value of the Bucking Bull brand through joint supply arrangements."
As in any multi-unit business, sourcing the correct volume and appropriate key products to ensure a high standard is consistently served to the customer in each outlet is essential in the catering industry. The beauty of the franchising system is that in many cases the hard work is done for you – and delivered to your door.
Of course vigilance by both franchisors and franchisees is essential. Is any tomato as good as any other tomato? When it's delivered on time, with the qualities and price to suit the requirements, then probably, yes. Perhaps there is a better deal out there and for any franchisee with strong ideas about improvements to an existing supply chain or with a fresh approach to the menu, there are ways and means to get your voice heard.
This article appears courtesy of Franchising Magazine.
The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.
11.06.2008
FCA Member
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