Pizza, Creationism and Evolution
Pizza franchising is an icon of franchise history. It is more appropriate in the context of evolutionary tendencies than McDonalds because the history of pizza franchising more closely reflects the vicissitudes of franchising history than does McDonalds. Illustratively, even though our economy is in the ditch, McDonalds has the skills to ride it through its worst fluctuations with apparent immunity. I eat at McDonalds a lot – in my car from the drive through. My car smells like French fries. During my recent frenzy of trial prep and trial, I think I probably lived on Texas Double Home style burgers with bacon, cheese and large fries. YUM! Don’t knock it if you haven’t tried it.
Sean Kelly just presented excellent cynical satire on a concept he calls ColdStone Pizza. It’s funny as hell, and it prompted in my mind the thought of how pizza franchising has developed and where it is now. Pizza franchising has gone from boom to bust over the almost 40 years that I have been involved in pizza franchising, whether as lawyer or customer.
I had the good fortune to know and to represent one of the early good guy franchisors in pizza, Little Caesars Pizza. Mike Illitch’s family put together a positive plan for franchisees to make money in the pizza business. They also treated people fairly. I personally know of accommodations made by them that no one would ever even ask for today.
Pizza Hut and Dominos also gave franchisees opportunities to make good money. Those three represent in my mind, the grand family of pizza franchising. Were there others? Of course. That is beside the point of this article.
Like hamburgers and ice cream and sandwiches, if you want to go into the pizza business today, you certainly don’t need to buy a franchise and take on all the high risks of franchise agreements, with initial fees, continuing royalties, advert fund requirements, liquidated damages provisions and covenants not to compete.
Instead, you can work in a pizzeria for three months – by which time you will know how to do it – and then do it yourself. Your reputation within 4 miles of your location is your trade identity. 800 numbers and international web sites mean little when your market is 4 miles around your store. You can have your own web site for very little money. There is POS equipment and software that will work in your shop just fine. There are tens of thousands of pizza store managers floating around in every city’s job market, all of them free and clear of any non disclosure agreement obligations or covenants not to compete.
If you have capital sufficient to buy a pizza franchise, you have more than enough to do it as an independent. If you get word out in your area through couponing; make great tasting pizza; and price competitively, you have a decided financial advantage over any pizza franchisee, and it doesn’t make a bit of difference what you call it – you might not want Muqtada Al Sadr’s pizza as your name, but aside from that- well…
In the history of the great pizza franchises, most have made money, while some have not. That is the normal pattern. Many who made money wanted to make more money. That spawned conflicts, but it didn’t detract from the fact that most franchisees were not missing either meals or vacations. The pattern is exactly the same with burgers, ice cream and sandwiches. You don’t need a franchise any more.
To me, that is the real message of Sean’s Article. Thanks, Sean. It’s a good piece. Now I’m dying for a pizza.