The Big Bang

We Can All Get Along

As franchising has grown, as franchisors have grown, and as franchisees have grown, something remarkable has happened-the conflict often so prevalent between franchisors and their franchisees throughout the 1970s and '80s appears largely to have subsided, perhaps reflecting each party's maturation. "There's been a big change," says DeLuca. "It's been quite positive, and it revolves around a great deal of communication between franchisors and franchisees. I remember 25 years ago, the idea of having a franchise advisory council was pretty novel for a lot of companies; the idea of actually getting some advice from a franchisee seemed foreign. Now it's pretty common, and systems work best when there's a strong involvement with the franchisees."

Amy Sherwood, vice president of public relations at Yum! Brands, says, "We realize the only way to achieve our goals and aggressively expand our business is through a strong partnership with our franchisees. One of the very first things we did as we formed our company in 1997 was to invite Jackie Trujillo, a KFC and Taco Bell franchisee, to join our board of directors. We make sure our franchisees have direct involvement and a voice in all we do and make a point to listen to their input as part of our decision-making process."

McDonald's chair James Cantalupo echoes the sentiment. "McDonald's founder Ray Kroc used to say, when referring to our relationship with our franchisees, 'None of us is as good as all of us.' Ray considered these businessmen and businesswomen to be the heart and soul of our company. Much of our worldwide growth in our nearly 50-year history is due to our collaborative working relationship with our franchise partners."

Indeed, Matthew Shay, executive vice president and general counsel of the IFA, observes that "the most significant development in franchising over the past 25 years is the achievement of the dream envisioned by one of franchising's pioneers, Bill Rosenberg [founder of Dunkin' Donuts and the IFA]: franchisors and franchisees working collaboratively for the betterment of the entire franchise community. In recent years, there has been significant progress toward achieving that dream, reflected in the services and programs offered by the IFA as well as by individual initiatives undertaken by many franchise systems."

Even the federal government notes how relationships between franchisors and their franchisees have markedly improved. "The biggest change I've seen in franchising since I came to this job [in 1987] is the growing realization on the part of franchisors that they share a common interest with their franchisees, and [consequently], in their being straightforward and transparent," says Eileen Harrington, associate director for the FTC's Division of Marketing Practices, who has served as the federal government's principal regulator of the franchise arena for the past 17 years. "There's been a real maturation in the way business is done and in the quality of the relationships between franchisors and franchisees in many, many systems."

Growing Up?

Franchising has come a long way since 1980 in terms of the overall number of franchises sold each year. So what's in store for the future? Stay tuned.

Growing Up?

SOURCE: Entrepreneur's Franchise 500® (1980-2004)

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This article was originally published in the January 2004 print edition of Entrepreneur with the headline: The Big Bang.

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