July 2014

Franchise Group to Sue over Seattle’s $15 Minimum Wage

The city of Seattle’s decision to phase in a $15 minimum wage has caused quite an uproar. There is one group in particular causing a ruckus: franchise owners. And it appears that they are doing so with good reason.

The Seattle City Council unanimously approved a minimum wage hike this past Monday, June 2. The new legislation will phase in a $15 per hour minimum wage annually over 3 to 7 years, depending on employer size. The phase-in process begins April 1, 2015. Many have championed the move as an important step in addressing income inequality. “Today we answer President Obama’s call and the moral call to address the plight of low wage workers,” Councilmember Sally J. Clark, chair of the City Council’s Select Committee on the Minimum Wage and Income Inequality, explained. “Seattle’s new law puts low wage workers on a path to $15 and does it in a way that respects Seattle’s love for local businesses and world-leading innovation.”

The Seattle City Council feels that this new measure is an appropriate compromise, balancing the need to address income inequality with the needs of business through a gradual, scaled implementation. “Seattle has found a workable and careful compromise that recognizes both the harm caused by stagnant wages and the harm to local businesses should we move forward too quickly,” Council President Tim Burgess said.

But not everyone is championing the measure as a necessary means of addressing income inequality. Franchise owners, particularly, are up in arms about the minimum wage boost. In an announcement Monday and follow-up press conference Tuesday, the International Franchise Association said it will sue to challenge Seattle’s new law. The lawsuit contends that the law unfairly discriminates against franchises.

The problem, the group explains, is the phase-in plan. The new Seattle legislation creates a tiered phase-in plan, under which big businesses must implement the $15 minimum wage faster than small businesses. Unfortunately, local franchises have been classified as big businesses, because they are part of a national organization that employs many workers in all. That means that a Seattle Subway will have to implement the changes faster than the local sandwich shop. Most franchises will have a mere three years to phase in the wage hike.

IFA president and CEO Matthew Caldeira contends that this is unfair and unacceptable. “This lawsuit is not about the minimum wage,” Caldeira said. “Franchisees are being punished because they choose to operate as franchisees. Decades of legal precedent have held that franchise businesses are independently owned businesses and are not operated by the brand’s corporate headquarters.”

Local franchise owner Chuck Stempler agreed. “This is just grossly unfair and unprecedented. We are significantly disadvantaged by this arbitrary and capricious decision,” he implored. The Seattle Times has also echoed this sentiment, opining that the city should amend the law to treat franchisees equally with other small business owners.

So, how will this all play out in the courtroom? It is far too early to tell for sure, but it looks like the IFA does have a good case. Setting franchise owners apart from other small business owners is a violation of the Federal Commerce Clause, said IFA attorney and former U.S. Solicitor General Paul Clement of Bancroft PLLC. Clement also explained that Washington state’s constitution contains a similar but stricter law that forbids local businesses from receiving more favorable treatment than those that have national ties. In all likelihood, these laws of equal protection will come into play in the IFA’s filing, which is still being prepared.

The IFA estimates there are roughly 600 franchise business owners in the Seattle area, employing about 19,000 workers. A ruling against the IFA could do serious damage to Seattle’s franchisees, while many speculate that a favorable ruling could undermine the entire minimum wage bill. Only time will tell how this all plays out. Regardless of the ruling, however, the case raises a variety of contentious issues regarding franchises, economic equality, and a fair wage.

 

Sources:

http://www.entrepreneur.com/article/234483

http://www.seattle.gov/news/detail.asp?ID=14430&Dept=28

 

http://www.forbes.com/sites/caroltice/2014/06/03/franchise-group-to-sue-over-seattles-15-an-hour-minimum-wage/

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

McDonald’s Testing App That Lets Customers Order Ahead

McDonalds wants to make fast food even faster. The iconic fast-food franchise is reportedly testing an order-ahead mobile payment app at 22 locations in Columbus, Georgia. The app, called McD Ordering, links to a customer’s credit or debit card and allows patrons to both order and pay ahead of time, cutting out the hassle of waiting in line. The phone clearly displays the order number, and a customer is charged once he or she arrives at the restaurant and is able to pick up the order and everything has been prepared. The app can even save customized orders.

Order-ahead apps are taking food franchises by storm, and it appears McDonald’s wants to get in on the action. The Starbucks app, for example, which allows customers to pay for purchases, find stores, track rewards, create custom drinks, and get free Pick of the Week songs, has garnered a considerable amount of attention. In April, Starbucks CEO Howard Schultz announced that the coffee chain’s app accounts for 14 percent of the company’s U.S. in-store payments. Dunkin’ Donuts and Canadian coffee chain Tim Hortons have also recently launched similar mobile payment apps. Many pizza franchises have also made the foray into mobile apps. For example, mobile and online ordering now account for a staggering 40 percent of Domino’s U.S. sales.

However, this isn’t the first time that McDonald’s has dabbled in apps. The franchise previously rolled out mobile ordering and payment apps in foreign markets, such as Austria and Thailand, and also currently accepts the contactless Isis mobile wallet at many U.S. locations. In addition, a separate McDonald’s app called McD App currently serves up coupons and loyalty offers in multiple test markets.

All in all, this new app is part of McDonald’s efforts to streamline customer experience. In addition, McDonald’s also stands to benefit from the transaction data the McD Ordering app collects. Combining the couponing and payment apps would allow the company to see everything customers purchase when they redeem a digital coupon. Over time, this data would allow McDonald’s to precisely target profitable offers, allowing it to better anticipate consumer preferences and potentially boosting sales.

 

Sources: 

http://www.entrepreneur.com/article/235114

http://www.businessinsider.com/exclusive-mcdonalds-is-secretly-testing-its-own-order-ahead-and-payments-app-2014-6

http://www.entrepreneur.com/slideshow/228722

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

USA Vs. Belgium World Cup Game Ignites Waffle War

Tensions flared as the USA geared up to play Belgium in the heated World Cup playoff game. How did Waffle House respond to the tension? By urging fans to boycott Belgian waffles. Americans have a long history of channeling outrage into symbolic food boycotts. Take the infamous 2003 freedom fries incident, for example, in which the nation banded together against France over its objection to the Iraq war by redubbing the french fry the freedom fry.

The waffle franchise issued a series of tweets, all of which had essentially the same message: Don’t eat Belgian waffles. The waffle chain is encouraging American World Cup fans to boycott Belgian waffles and instead eat all-American Waffle House offerings. The first of the tweets insisted, “we don’t believe in Belgium waffles,” while the second proclaimed, “We never have RT @chrisholder1997: Waffle House won’t sell Belgium Waffles #USA #IBelieveThatWeWillWin.” The tweet was tremendously popular, retweeted more than 15,000 times. Waffle House even threw a picture into the mix, carving the letters USA out of a Belgian waffle.

And Waffle House wasn’t the only franchise to condemn waffles as unpatriotic. Bojangles’, a Southern chicken-and-biscuit franchise, encouraged customers to “beat Belgium with biscuits.” “We’ve been boycotting waffles since 1977. #BeatBelgiumWithBiscuits #USAvsBEL,” the company tweeted.

Companies with Belgium roots, however, took a different approach to the game. Wafels & Dinges, a New York City-based Belgian food truck, made the diplomatic decision of supporting both teams with free food. Trucks handed out free Belgian style “waffles” after every Belgium goal and free scoops of ice cream after every USA goal.

 

Source:

http://www.entrepreneur.com/article/235305

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

US Franchises Embroiled in China’s Fast Food Safety Scare

In yet another Chinese food scandal, it appears that U.S. franchises may have been duped into buying tainted fast food meat. According to a July 20 report from Shanghai TV, a local television station under SMG Group, SI Group’s China affiliate, which supplies McDonald’s and Yum Group’s KFC on the mainland, was accused of unhygienic production and storage practices as well as selling expired meat.

Footage in the 7-minute report showed a batch of chicken breast and chicken skin that had been expired for around 12 days at the time of the filming. The undercover reporter asked if it was OK to use the meat, to which a factory official responded, “No problem.” The chicken was subsequently used to create chicken nuggets.

It should be noted that the report doesn’t directly criticize McDonald’s or KFC. Instead, the report suggests that OSI, which has production capacity of around 25,000 tons of meat per year, was working to trick both companies’ inspectors. A worker was recorded saying, “We can’t let McDonald’s or Yum China know that we add (chicken skin). They won’t let us do that. Otherwise, we would lose the contracts. Who wants to do business with you if you break your promise?” When company inspectors were in the workshop, unqualified chicken nuggets stored in blue bags were taken off the production line. Once the inspectors left, they were placed back on the line.

Just hours after the report aired, McDonald’s released a statement. “McDonald’s has zero tolerance for any mispractices and we abide strictly by all laws and regulations with strict standards for ourselves and for all suppliers,” the company said. “There is no compromise to the well-being and food safety standards that Chinese consumers have come to expect from us.” Yum China released a similar statement, insisting that all OSI-supplied meat products will be removed from its shelves.

Sources:

http://www.entrepreneur.com/article/235790

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

When Success Wanes: 3 Thriving Franchises That Have Hit Tough Times

Nothing lasts forever, as the saying goes. This is something that three former major franchises are all too keenly aware of. Once the giants of their respective markets, these three franchises have now all fallen on hard times. Let’s take an in-depth look at what prompted their downfall, as well as speculate as to whether there is hope for their future.

  • Sbarro. This Melville, New York-based pizzeria has been has been serving up slices of pizza for more than half a century. But in March, the franchise, which has been open since 1956, filed for Chapter 11 bankruptcy protections and announced plans to close 192 of its nearly 800 units. The second bankruptcy filing in less than three years – things aren’t looking so good for Sbarro. So, what went wrong? As it turns out, Sbarro’s glory days were back in the 1980s and 1990s, when its strategy of targeting indoor food courts made it a mall food court icon. But an unprecedented decline in mall traffic has translated into a decline in Sbarro sales. Considering experts are predicting that half of U.S. malls could be gone in 10 to 15 years, Sbarro is going to need a huge pivot to stay afloat. “Because they’re so heavily concentrated in shopping centers, Sbarro is just an extension of the story of malls in America,” explained Mike Sheehan, a franchise consultant and attorney at Focus Ventures and principal at Franalytix in Leesburg, Va. “They need to pull back and reassess their strategy. For them to find success is going to require major surgery.”
  • RadioShack. This Fort Worth, Texas-based electronics store has more than 4,000 company-owned and franchise units in the U.S. Unfortunately, these days RadioShack has an image of being of about 30 years passé. In an era of constant technological innovation, RadioShack has simply failed to keep up. It has consistently lost market share to online retailers like Amazon, as well as communications giants like AT&T and Verizon. And with no specific niche identity, the future seems dim. The store reported a $400 million loss in 2013, on top of a $139 million downturn in 2012. “RadioShack’s main issue is irrelevance,” Sheehan explained. “I’m actually amazed they’ve gotten as far as they have.” In March, the company announced that it would close 1,100 underperforming stores in an attempt to streamline and reformat the brand. But in May, executives nixed the plan. It seems that lenders are much more interested in in retaining as many company assets as possible for a future liquidation, rather than revamping stores. In other words, lenders are more interested in preserving their investment than seeing the company succeed.
  • Quiznos. At its peak, Denver-based sandwich-maker Quiznos had roughly 5,000 U.S. stores. Today, that number has dwindled down to a mere 2,100. And in March, Quiznos filed for Chapter 11, hoping to reduce its debt load by $400 million. Many franchise experts attribute the Quiznos downfall to its poor relationship with franchisees, particularly its supply-chain markup structure, in which franchisees are forced to buy supplies from Quiznos at a markup, instead of directly from franchisees. Analysts argue that practice eats away at profits and is especially detrimental to new owners struggling to establish themselves. That, in conjunction with the brand’s inability to differentiate itself from competitors like Subway, has been a recipe for disaster. So, is there hope for the future? Well, things look grim. “Consumers are naturally repelled by ailing establishments. Lack of success is a self-fulfilling trend,” Sheehan said. “Once you start closing shops, it’s difficult to recover. Just think: Over the last five years, more people have walked up to a Quiznos [that has] an ‘out of business’ sign than an ‘open’ sign. That’s not good for business.”

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

5 Ways to Conquer Your Procrastination Habit

Chances are if you’re an entrepreneur, you don’t have time to procrastinate. Kick your procrastination habit to the curb with these five tips.

  1. Learn how to effectively manage your time. Before you delve into a task, try to estimate how long it will take you. Once you are done, compare the actual completion time with your estimate. This will help you to more accurately gauge how long it take you to complete a specific task, whether it’s reading through a 40-page market research report or reviewing last month’s profits. Armed with an accurate understanding of how long specific tasks will take you to complete, you can engage in more effective planning and simplify your schedule. Not only does this cut down on stress, but it also improves the quality of your work and reduces the appeal of procrastination. After all, if you have to give a presentation at 10 a.m. and you know the prep work will take about eight hours based on past experiences, you aren’t too likely to put off the prep process until the night before.
  2. Get work done in productive environments. Plopping yourself in front of the TV with your laptop and a bowl of popcorn to finish writing that business report is a recipe for procrastination. After all, do you really want to read through dense business jargon when your favorite show is on in the background? Turn off the TV, put away the popcorn, and move yourself to a serious workspace free of distractions. This helps you to focus on the task at hand and removes obstacles to productivity. Remember, distractions are a procrastinator’s worst enemy.
  3. Be realistic. If you need to prepare for a 30-minute talk for a big employee meeting, don’t expect to be able to get the whole thing done in 15 minutes. Plan your time realistically. Otherwise, you’re just setting yourself up for failure. And don’t forget to prepare for obstacles. Sometimes things go according to plan, but a lot of the time they don’t. Always plan for obstacles by building a bit of leeway time into your schedule.
  4. Be flexible. You might think the way to resist the temptation to procrastinate would be to develop a rigid schedule and to stick to it at all costs. Wrong. If you’re trying to kick your procrastination habit to the curb, the way to do so is with more flexibility and less rigidity. Strict schedules jam-packed with tasks leave you with no breathing room and cause you to feel overwhelmed, which will only fuel procrastination. Be realistic about how much you can complete in a day (this is where effective time management comes into play), and always make sure to integrate “you-time” activities into your schedule, whether it is a yoga session or a friend’s birthday party. This will keep your mind fresh and your productivity levels high.
  5. Reward your progress. Let’s say you set a goal to answer your entire email backlog within three hours. If you complete the task successfully within the pre-established timeframe, reward yourself! The award doesn’t having to be anything elaborate — it could be something as simple as taking a walk to get a coffee or scrolling through your favorite online news site for an hour. Whatever it may be, reward systems help to positively reinforce effort and progress and provide incentive to be productive.

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.