Are your business techniques annoying your franchisees?

What frustrates franchisees the most? A recent survey of McDonald’s franchisees in the US asked what worked well and what was most frustrating in the fast food chain.

The business has seen a boost in same-store revenue for the last quarter of 2015. But the growth is unsustainable, according to some of the 30 franchisees polled for their opinion.

“No way we can beat last year,” one franchisee said.

According to Business Insider, the franchisees surveyed are seeing a decline in growth. But not all the respondents – who between them operate 271 outlets in the US burger chain – were complaining: two franchisees said business was on a roll.

The survey revealed there were three key areas of concern:

1. Discounting

Some franchisees complained that discounting products served to reduce franchisees’ return on investments.

2. Wages

Increased wages were making it tough for franchisees to make a profit – particularly when menu prices were lower.

3. Complicated menus

A complex menu was another source of frustration, with staff finding it hard to manage multiple variations and difficult kitchen operations and still deliver a fast food service.

Customers love value for money but a cost-conscious focus could be detrimental to the franchise network.

So what can franchisors do?

The issue of wage compliance in Australia is a hot topic right now and questions of underpayment are getting publicity. Paying more, rather than less, is likely to be the key concern to address: when it comes to the cost of labour franchisors actually need to be reviewing their part in franchisees’ employment policies and payments.

The issue of discounting items to provide a competitive edge was at the heart of a class action by Australian franchisees in the Pizza Hut chain. While the franchisees failed in their attempt to sue the franchisor over its decision to reduce pizza prices in 2014, there are lessons to be learned.

Raynia Theodore, a principal at MST Lawyers, suggests franchisors carefully think through and research any proposed strategy and ensure there is a reasonable basis for any decision made.