Several years ago when Facebook entered the social media scene, franchisors often weren’t proactive in claiming their presence on the platform, leading franchisees to create their own pages. Many franchisors are still walking this back as they aim to gain control over that social media interaction, and, noted Food On Demand Editor-at-large Nancy Monroe, a similar situation is arising as franchisors grapple with third-party delivery and instances of franchisees signing their own delivery contracts.
Moderating a panel at the Food On Demand Conference in Chicago April 1, Monroe, along with panelists Amy Cheng, a partner at law firm Cheng Cohen, and Dawn Croft, director of legal at KFC, tackled this topic as Croft said, “We don’t want to have a bunch of franchisees doing a bunch of different things.”
“We have to think about a system of 4,000 stores and how are you going to create a consistent experience,” said Croft of the considerations, along with how is delivery going to make money for the franchisees in the system. After an internal analysis and lengthy conversations with franchisee leadership, KFC piloted several aggregators before parent Yum Brands ultimately issued an RFP that resulted in a partnership with Grubhub last year.
The offering of delivery is voluntary within the KFC system right now, said Croft, as the brand undertakes “an exercise in getting our franchisees behind it.”
That’s exactly the right move, said Cohen, who is negotiating third-party delivery contracts on behalf of franchise clients and is encouraging franchisors to address this changing landscape in their franchise agreements.
“It’s social media 10 years ago—no one has it in their contract,” said Cheng, which also means there’s no way for a franchise brand to keep franchisees from working with delivery providers on their own.
Cheng also called attention to an intellectual property concern that arises when a franchise does sign an exclusive national delivery contract but its franchisees are still using local providers, without permission for those providers to use a brand’s trademarks.
“Frankly it’s an issue that a lot of people are turning a blind eye to right now,” said Cheng, mostly because consumer demand is driving the conversation. Third-party aggregators are becoming more educated on the intricacies of partnering with franchisors, she said, but these aggregators need to understand they’re not just working with the ‘zor but all the franchisees in the system.
Croft noted third-party services should be “willing to give a little bit” when negotiating fees and other components of a contract and understand “franchisors aren’t looking at this as a short-term trend, but how can we make them part of the long-term strategy of our business.”
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