Burger King announced in November that it was terminating contracts for 89 of its franchised locations in Germany.
An undercover report revealed that the restaurants had been serving expired food, as well as poor hygiene and treatment of staff has been revealed. Aside from serving expired food, the franchisee had been withholding employees’ holiday pay, bonuses as well as sick pay.
This is a cautionary tale for both the franchisor and franchisee about the importance of managing two key aspects of the franchise business:
1. On the ground management
The franchisee for Burger King, Yi-Ko, ran all 89 franchises and was one of the largest franchisees in the region. This comes with its own set of challenges, particularly when your chain of franchises grows too rapidly to properly monitor.
Franchises must ensure that management is properly trained, and more importantly, hands on when dealing with issues affecting the day-to-day running of the business.
Poor hygiene and mismanagement of staff does not simply happen overnight, but is a progressive march to failure which would otherwise be prevented by a management team that is on the ground ensuring the standards of the franchise are consistently maintained.
2. Bringing in the right franchisee
For franchisors, the reputation of the business is of utmost importance, and this type of scenario can cause brand damage that will take a long time to recover from.
It is therefore essential for franchisors to not only select wisely when considering franchisees, but ensure that the quality and standards of the franchise are maintained at all times.