| September 2011 | By Roy T. Bergold Jr.

The Big Risks of Franchising Too Fast

If quick serves aren’t careful, they can lose their core focus and spiral out of control.

image used with permission.

Once upon a time, there was a little hot dog stand on the West Coast. It was a cute and very fun place, with no attitude and a penchant for friendliness. The food was good, not great; the service was fast; and the place sparkled from top to bottom. But the most important thing was the value. You got a whole lot of good food for a very good price and people flocked there. And the little stand loved kids. If kids spilled, that was OK, because that was why mops were created.  

One day, someone said to the owner that he should open more of the little stands so more people could get his good food. So he did. Then he opened more and more, and one day he had so many that he did an IPO.

You know what happened? Sure, he got rich, but more importantly, he started to spend all his time watching his stock price and not very much time worrying about what his customers wanted, or what his employees needed, or how his suppliers profited. He also forgot about the existence of his franchisees, and his hot dogs suffered.  

So people found other hot dog stands to go to and his stock price went down, and he got nasty, and the whole thing went poof. He forgot what was important and his brand weakened, and eventually he was back to that one little stand. But it was too late.  

Why is it that some brands weaken and go away? Well, there are some problems that can bring an entire brand down, and if you see them in your own organization, beware. You don’t want to be the next Burger Chef or Schlitz.

The above example is obviously the most important of all the potential problems that a quick-serve brand should avoid, but let’s look at some others.  

Brand image comes to mind as the next most important. Who are we and who do we want to be? It seems that everyone wants to be everyone else. Chains have started as places for adults to go to and then decided to change to kids and vice versa. And there are chains that have absolutely no idea who they are and waver day to day. If I don’t understand the personality of someone, how can I like them and want to be with them? I buy from someone I like. Just as you have a personality, your company must have one and stick to it.

Here are some other things to watch for.  

Don’t try to serve everything from Dolmas to fried green tomatoes. As soon as something gets trendy, folks buy the equipment and try to serve it, forgetting what they are known for. Pizza is more than cheese and dough, and coffee is more than a cheap price.  

You’ve got to keep innovating. And you’ve got to solve the drive thru. We can’t keep putting 60 percent of the business through one window. There has to be a better way and a better package for french fries to go home in.

“Your company must have a personality and stick to it.”

Then there’s over-capitalization. Get your existing stores really successful before you worry about lots of new ones. This takes us to where to open new stores. If your home is in Missouri, own that state before you worry about Maine. It’s really tempting when that Maine millionaire calls and says he will open 20 stores in Belfast, but how are you going to watch over and help him?  

Do great advertising, but remember promotion can cost real money. One of the first Big Mac commercials we ever did just talked about Big Mac, no discounts, coupons, or free fries. We ran out of meat and buns. And make sure you are supporting your community. It’s tough for a kid in a soccer uniform with your name on it to go into a competitor.  

If you are considering selling out to a stronger brand, just be aware that you may be swallowed up by him. Your profit may be used to solve his problems. I have never understood how a Chevy dealer can have a Ford dealership, too. One of those companies has to suffer.  

Take a look at your corporate structure. If you have a lot of committees, you are in trouble. Odds are you have no decision makers, just lots of excuses. And while you’re at it, look at your management. Are they inflexible or will they try new ideas? Do they really listen and act? Is there an ideas budget? And is there one person truly in charge of the brand? There ought to be. Do operations and marketing love each other—really, really love each other?

If your manual is more than 23 pages long, including the cover, watch out. It’s called simplicity. And part of that is cleanliness, which is next to everything.

Be careful that there is a clearly understood plan and direction, not just more sales. What about profit for the operators? And make sure a good percentage of those profits goes into growth, not just into pockets.  

Be consistent. Watch out for fads versus longevity. Be contemporary, but don’t change your menu every day. And for your sake, don’t get caught in the less-product-for-the-same-price-in-the-same-size-package movement. Shame on cereals.  

I read a recent research study from a well-known magazine. Almost 38,000 sampled people had recently made more than 98,000 visits to quick serves around the country. The results are a road map for you to follow. The study found that people got good service but lousy food. Cheap food may not be a bargain, because people look for more than taste—they want value, what you get for what you pay.

They also want a better experience. They want the place to be nice as well as valuable. They said that sometimes fast food isn’t, and that is a huge problem. And, no surprise here, they talk thin but eat fat. We offer them healthy alternatives, but food reward wins every time.  

So again, look at your organization. If lots of this list is happening, buy your regional manager lunch at your place and have a talk, or e-mail me. I love this business and you’re the new generation that can make it all better.  

Happy Trails, a Peaceful Life, and a Powerful Brand. 


While it has been quite awhile since we last spoke, I have stayed in the loop by reading and enjoying your articles in QSR faithfully every month. This article hit home with me as the things you address, especially VALUE and BRANDING have always been a major part of my concept.WOODIES has been on hold, due in large part to the economy, both from an investment standpoint and the source of income from my primary occupation, Real Estate. I am planning to revitalize WOODIES when the economy gets back in line, and maybe we can talk more at that time.I hope all is well with you and yours, and I look forward to more conversation and your continued articles in the future.Kindest regards,Bob

How do I find a person or group that will take our concept to the franchise level? I have created a franchise concept ready to go to the next level. I want to find a way for me to help each franchise run the best business in town with the other half of the corporation doing the business of finding franchisees, collecting the fees, percents, advertising and other, with me doing the operations in the field with each new restaurant we put up. I have 38 years of experience and opening 5 other restaurants in the last 28 years. I now have ended up with a concept that will be able to reproduce and have settled on the business of growing it.HELP!Jerry PardoFresh Grill (burgers & fries)503-515-4399

I'm a first time reader, but I had a thought. You might want to also talk about building up a small firms infrastructure too quickly and/or too slowly.The effects can be deadly and as a Restaurant Management Recruiter, I have a fantastic vantage point with some of my smaller clients to see this challenge first hand.Take Care...Ken Smith.

Having grown up in the business it always amazed me how quickly the product is set aside for marketing, location, expansion and brand. In the 60's and 70's it was the product that made all of our famous restaurants grow. Howard Johnson's had 28 flavors of ice cream and that fountain was always what he was about...then, they lost what they were. It happens. Bill Rosenberg started Open Kettle in the 50's with 52 varieties of doughnuts. This company became Dunkin'. The company grew and kept their product at the top making fresh doughnuts every four hours. Not anymore, but, Dunkin' remains a strong brand.In our business it isn't about convenience anymore. Hojo's was the only consistent highway food for 1000's of miles in the 60's...not anymore. McDonald's was the only fast burger in town in the 70's....not anymore. Now we need to serve outstanding food. Our product needs to be the best and the raw product and modern equipment is here to deliver that promise. Frozen chicken and canned gravy is losing it's competitive spirit....fortunately. Make an all natural fresh product and deliver it to the Iphone user. Think I'm crazy? Talk to Dominoes.

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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.