Roy Bergold: Tales from McDonald’s | January 2010 | By Roy T. Bergold Jr.

Who to Sign With

Choosing the right franchise to buy into is difficult, so Roy offers veteran advice. If he was thinking about buying into a franchise company (and he is), what would he look for in the perfect marriage?

Roy Bergold
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The Happiest of New Years!

This month’s issue tells you of some great franchise values out there. So, I decided to give you the benefit of my 32 years of watching franchisees come and go and create Roy’s list of what to look for in a franchisor. If I was thinking about buying into a franchise company (and Kate and I have talked about doing so), what would I look for in the perfect marriage?

First and foremost: franchisee advocacy. Ray Kroc knew and taught that the franchisee was the most important leg of the three-legged stool. The franchisee sometimes goofed up, but he was always right. And, as goes the franchisee, so goes the company, no matter how many company-owned stores there were. We all worked our collective south ends off making the franchisee successful. Even to the point that there was a senior officer acting as an ombudsman between the franchisee and the company when there was a disagreement. And there was one every once in a while. You can stop here and I’ll bet the rest of my list is automatically there if the advocacy exists. But I’ll go on.

What is the track record of the company in terms of sales and profits? Are the two in balance? The company should be as concerned about the franchisee’s profit as they are concerned about the top line sales that get reported to Wall Street.

There needs to be a well-organized training program for new operators. I walk in knowing nothing and walk out an expert on how to run my new business. I know every station and equipment piece in the restaurant.

Another thing, do the other franchisees seem to be happy? They should be the kind of people you want to sit next to in your restaurant. There is no question that your fellow franchisees would be the first ones there if you needed help because what happens in one store affects all the other stores in that franchise.

“In the beginning your company will make you, but as time goes on, you will make your company.”

Are there dayparts missing that should be there, like breakfast or dinner? You should be proud of the décor and appearance of your building. Can you add menu items or condiments as befits the regional taste? Are you proud of the food you serve and its fit in the community you are in?

Talk to the corporate people. Are they experts at their jobs who want to help you understand their particular expertise? Do they offer manager and crew programs as incentives for performance to help you attain the best results you can?

Is there a co-op program, particularly marketing and purchasing, that helps you to get the most effective and efficient advertising and the best possible prices on supplies? Are there a lot of items and suppliers you are required to use without a network of choices that helps keep pricing competitive?

What do you own? Land, building, signage package, right to use the trademarks, inventory—all or just one of the above? Is there an operations consultant available from the company on a regular and emergency basis? Is there company help with finding a site and construction? What are the criteria for expansion?

Who is your competition specifically, and what is the company’s plan to combat them?

Do you have unique products with unique names that customers remember, and is there a flagship?

Is there a yearly national meeting where you and your fellow operators can commiserate, tell stories, help each other, and get help?

Is there a strong marketing program available, no matter how big the company? Remember, you don’t have to spend a lot of money to get great marketing. Make sure your potential franchisor has the tools to do a program store by store, including the advertising and promotion materials, available at a reasonable price. And make sure the franchisee has a voice in what programs are made available and the materials that support these programs.

Is there active menu-item development attempting to satisfy the ever-changing tastes and preferences of your customers? Is the company working on alternative service techniques to make the lines shorter, and the service times quicker? This is where the drive thru came from.

What is the company philosophy on selecting new operators? The best is to make sure that the new owner actually works in the store and is not just a financial investor. Getting your hands dirty is the best way to run a store and is the most fun.

Have the company people been trained in every station in the store? Then and only then will they understand the problems and issues they will deal with.

Are there emergency funds available from the company to help a co-op or operator if the unexpected happens? The town decides to close the road for a week to plant grass along the curbs. Will the company help to pay for a grass promotion?

Do the old operators truly mentor the new operators? At McDonald’s, in some co-ops, an existing operator was assigned to a new operator to show him the ropes. Really cool idea.

Where does the company spend its money? Nothing wrong with nice offices, but maybe the money could be better spent helping the operators. Heck, let’s get rid of all the offices and get out into the stores.

Value is what you get for what you pay. Make sure your potential franchise is a value. In the beginning your company will make you, but as time goes on, you will make your company. That’s fair and the way it should be.

By the way, I am back doing the speaking gig. Missed talking to all of you directly. If you would like to hear me out in person, send me an e-mail. I would love to meet you.

A Peaceful New Year and Happy Trails.

Roy Bergold

Roy started his career at the Leo Burnett Company in 1967. Two years later he decided to sell hamburgers instead, and began his adventure at McDonald’s. Starting as an assistant advertising manager, he became manager, national advertising manager, director of advertising and promotion, assistant vice president of advertising and promotion, and vice president of advertising.

Roy retired from McDonald’s in 2001 as Chief Creative Officer. Along the way, he was responsible for U.S., as well as all advertising worldwide. While under his care, McDonald’s earned every creative award possible, including Cannes, Clios, and the Four A’s best five year campaign. Roy lives happily in Payson, Arizona, with his wife, dogs, and horses.