Yesterday, we discussed some of the differences that erupt between franchisors and franchisees and how to go about solving them. We’d like to extend this topic for one more day by focusing on a rare man in franchising: someone who has experienced life on both sides of the franchise divide.
Meet David Karam. He is the president of Wendy’s, but he’s also one of the company’s largest franchisees. If there’s anyone who understands the stresses and pressures of being a franchisee and franchisor, it’s David. And we found this interview with him in Chain Leader magazine quite illuminating.
Karam discusses his own experience with Wendy’s as well as some of things that both franchisees and franchisors should do to make their business run better. Here’s a sample of the interview:
Since you bring them up, what conflicts loom between you, now president of the company, and Wendy's franchisees?
Honestly, I don't see any conflict. Franchisees have a long-term perspective. Their investment is illiquid. It's not just their net worth at stake, but their life work. Wendy's has tried to avoid [signing] financial engineers as franchisees. Historically, we've typically nurtured operators. If you have that long-term perspective and you are also given the opportunity to steward the brand, I don't understand or see the conflict.
For the sake of argument, let's say the board wants to increase the royalty by a half of a percent. Where would you stand?
If there came a point where I felt I was being directed or asked to embrace a policy I couldn't support, I would not do a disservice to the board by trying to play the middle ground. I would be clear in my perspective on what's best for the business in the long run.
Yet you bring a different perspective from that of a professional manager.It is different, in part because I am more entrepreneurial. What you see in a lot of people who have only worked in large corporations is they oftentimes are missing that entrepreneurial ingredient that understands risk and reward. When you understand that and are disciplined in the way you make decisions, it binds that relationship between franchisor and franchisee even more tightly. Trust me, it doesn't mean we aren't tackling issues that some franchisees are opposed to, at least at some level, whether that's value, reinvestment, breakfast advertising or raising operational standards. These are often lightning-rod issues.