Fewer Franchise Rules, More Difference

A Few Networks Are Opening Up to Having Franchise Units Alter Menus and Prices to Compete Better Locally

It is something of a see-saw. Tip up the local freedom of a franchise to decide local foods and price points and they can better compete with local independent restaurants, but down goes brand consistency. And vice versa. Yet franchisors are increasingly letting their franchisees localize food, decor, price points, opening hours and even name.

But wait. If you localize the name or change the customer experience, where's the brand identity? Here is one franchisor who thinks localizing names and hours with its franchisees is good for business.

Wings Over restaurants can incorporate the city or region where they're located into the name — say, Wings Over Washington, D.C. — "to make it feel more homey," says Mark Simonds, president of the Agawam, Mass.-based Wings Over franchise chain. In addition, stores in college towns, where Wings Over is popular, don't have to open until 4 p.m. and can close at 3 a.m. to 4 a.m. Usual weekday hours are 11 a.m. to midnight.

Then comes the adjustable menus. You've heard of McDonald's Apple Pie. Well, try the local favorite, Taro Pie, served in McDonald's in Hawaii (see photo above).

. . . the question is, does it make good business sense? . . . It does for Mike Ferretti, president and chief executive of Great Harvest Bread Co., who calls the approach to running his business "freedom franchising," a term the company recently trademarked. He describes it as a culture in which the best ideas in running the business come from the bottom up, not the top down.

The Dillon, Montana-based company encourages its franchise bakers to come up with new ideas, such as a recipe for chicken salad, and share it with other franchise owners through an internal company Web site. If the idea works, then it can be rolled out in other markets, perhaps tweaking some ingredients, he says.

There are only a few stipulations. Bakery owners must use approved wheat, which the company supplies; respect territorial rights; and pay the royalties, which range from 4% to 7% of total sales. Other than that, "we encourage bakeries to make decisions on a local basis that works for them," says Mr. Ferretti.

A crop of franchisors also allow price and hour adjustments, like Beef O' Brady.

Nick Vojnovic, president of Beef O' Brady's, says the company was concerned about losing business in a market because of the higher prices. But he says his franchisees knew the market better there so he let them change the menu price.

It's a brave new world out there in which franchise chains are redefining what a brand means.

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