KFC Franchisee Related Notes from YUM Earnings Call
February 4th, 2010
In the YUM earnings call today, several KFC and franchisee related questions and discussions arose. In summary, David Novak indicated that they would continue to work the
- fried chicken- guest veto issue
- the value problem in that some franchisees have above market prices and
- need for more reliable service.
Novak noted they were auditing, racking, stacking and publishing key franchisee metrics, to highlight attention and expressed faith in Roger Eaton. Novak noted that "marketing control is owned by the franchisees." We'll post a link once available.
Related Reading:
Yum CEO acknowledges KFC franchisees own marketing
Main stream business media automatically assumed a heirarchical management structure in which the corporate office tells its stores what the brand will do. It saw a narrative of franchisees revolting against a corporation moving too aggressively into grilled chicken.
Because of a deep understanding of franchising, reporter Janet Sparks solely picked up on the underlying issue. For years and years, KFC's franchisees have successfully created, managed and controlled one of the world's greatest of the great marketing brands. The franchisor acts in an advisory role. Now a wayward KFC CEO wants to wrestle away from store owner-operators control of marketing and most importantly, its ad funds. The new revenue stream could eventually lift KFC Corp revenues with minimal short-term costs.
There is a famine in the land. It is difficult for KFC's CEO Roger Eaton to resist eating the chubby southern chicken (dba the National Council and Advertising Cooperative, Inc.) that lays golden eggs. Fortunately, his boss, David Novak, CEO of holding company Yum Brands, publicly recognizes contractual realities. I hope he also feels from head to toe the masterful marketers and their front-line insights that has been gained by putting its talented franchisees in charge. This collaborative culture, that goes way beyond just listening to franchisees, is one of the enduring strengths of KFC that makes it stand out among its competitors.