Venue:             Southern Sun Grayston (corner Grayston Drive and Rivonia Road)
Date:                Tuesday, 20 March 2007

  • The motivation behind having both company owned and franchised outlets
  • Workshopping the cultural, management and resource differences between company-owned and franchised outlets (facilitated by a team from Franchize Directions)
  • Discussion on when separate infrastructures need to be established
  • A panel of experienced franchisors share their strategies and tools to deal with these ownership disparities

FEEDBACK REPORT
Merits of Company owned and franchised stores

  • Can experiment and test changes with company owned stores;
  • Need cash flow of company owned stores to supplement growth;
  • Joint ventures can also contribute to financial;
  • Often managers of company owned stores are more committed to the brand and are more loyal;
  • Branch Managers often establish culture (easier to infiltrate in the Group)
  • Easier to match theory versus reality through company owned stores;
  • Company owned stores often set an example to franchisees;
  • Difficult to keep franchisees on “tight leash” but easier to control branch managers;
  • Franchisees own their own businesses so feel more independent;
  • Branch Managers can be a potential resource pool to select and groom franchisees;
  • Profits are all yours in company owned operations;
  • The feedback from company owned units assist in quality controls and overall system improvements;
  • Statistical data may be obtained quickly from company owned stores.

Downsides of Company Owned Stores

  • Cultural implications if separate head offices for company owned and franchised stores;
  • Motivation needs differ between company owned and franchise mangers;
  • Motivation of franchisees often higher than store managers;
  • Expansion may not be as rapid if a company owned presence is already there.

Panel Discussion

It was forthcoming that joint ventures have becoming a popular mechanism for enjoying the benefits of both the company owned and franchise mechanism. Pick ‘n Pay, PG Glass and Nando’s have recently adopted this mechanism as one of their key growth strategies. 

It was noted that it is a myth that branch managers do not perform and that there are many branch managers that do a superb job.  Pick ‘n Pay, which originally had varying brand names for their different types of ownership models, has now adopted a “one name” strategy.  This has emerged after franchisees proved that they have been able to bring great credit to the Pick ‘n Pay name.

In conclusion, it seems that have a mix of company owned stores, joint ventures and franchises is the ideal mechanism for most companies, depending of course on strategy, financial considerations and available resources.