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The secret of KFC's success is not the secret herbs and spices that cover its chicken, although those are lip-smacking good. It's not the size of the chain, although it is huge. KFC's biggest strength is its franchisees and the parliamentary structures in place that has enabled the franchisor to tap into its army of owner-operator entrepreneurs.
What characterized this system from the rest is that its franchisees have had strong influence and control from the beginning. It is one of the key organizational advantages that separates KFC from the run-of-the-mill franchise networks. The results? While many of KFC's competitors in the last half-century have been consigned to the dustbin of history, from Kenny Kings to Kenny Rogers Roasters, Kentucky Fried Chicken has grown into 15,000 units in over 100 countries.
Consider this: in marketing and promoting, it was a franchisee who bought a white suit for franchisor Harlan Sanders, and then made him wear it in a parade. Sanders learned to love that suit. It helped make him into an American icon extraordinaire. In product and pricing, Utah franchisee Pete Harman introduced a whole bucket of chicken (audio interview) at the right price for families to sit down and eat. It was a hit nationwide. As more and more franchisees joined the chain, a franchisee advertising cooperative and an independent franchisee association took root in this system decades before other systems. It is hard to review KFC's history without coming to the conclusion that strong franchisees and independent franchisee organizations who make national decisions are in KFC's DNA!
Want to better compete and stop market erosion? Suppressing franchisee structures stifles who KFC is and what it does well. Last Monday's Delaware court decision that affirms the cooperative's right to make advertising decisions for the chain could be a good reason to take the high road and give more than what is legally required. The franchisees' National Council and Advertising Cooperative, Inc. (NCAC) needs more responsibility and authority. And the independent association of KFC franchisees needs to be better embraced.
Granted, representative governance in franchise systems is messy. As this lawsuit shows, sometimes it is real messy! But instead of stifling the 40-year old NCAC, it is in KFC Corp's own interests to empower the franchisee cooperative more. Why? Because KFC's competitors only have advisory council members who whisper into the ear of their franchisor king. On a good day, they may be heard. Their franchisees tend to be more passive. Those chains are scared of what KFC has — franchisees calling the shots. It sounds like anarchy to them. But when push comes to shove, this chicken chain is no chicken. It knows how to build governance structures that constructively channel franchisee energies to lead the brand.
That is a critical competency to have. Why? Because the long-term investors of the brand, franchise owner-operators, have some of the best insights of conducting the right moves at the right time that impact customers. By having elected franchisee representatives who oversee national functions, franchisees are given a great opportunity to see how the decisions they make impact the system and the market as a whole, not just their own store(s). They are also in a good position to communicate with other restaurant owners in their language, through their eyes, and in their turf. That's why representatives should be elected frequently so that the body is stirred. New blood. Because the experience is good for the development of franchisees individually, it needs to be spread around so that the brand develops deep pools of talent among owner-operators. Collectively, this creates a learning network that can better move with change. In short, those messy franchisee governance bodies create a better class of franchise owners, a better franchise network and a better franchisor.
It doesn't serve an organization well to have that sort of talent just sit there and vote yes or no on what a franchisor wants. That's a waste. Such talent needs, dare I say demands, to be given functional responsibility to lead and direct.
All will benefit.
As KFC company-owned restaurants are refranchised, Wall Street will reap the benefits from business risk spread from KFCC to franchisees and from lower KFCC overhead costs since franchisees will make more functional decisions for the chain. KFCC and the chain will receive better operational insights that enable it to outmaneuver its competitors.
Hey, if you got it, flaunt it. And build on it.