Is McDonald’s Franchise Business Model Starting to Lose?

It’s daily business to hear of smaller Vancouver franchises milking their Franchisees’ profits and doing funny business, but it has been rare if not non-existent to hear negative stories like this one about McDonald’s from a business perspective.

We are often asked, at the VCSFA, “Are there any good franchises out there?” to which we always reply “Yes, there are a few good ones out there and not all hope is lost.  The model remains a win-win model, in theory providing there is a leadership who cares.”

But sometimes leadership doesn’t care.

It seems that more often than not, the Franchisor views their Franchisees as slaves in their revenue-stream producing retirement plan.  Any noisy ones are quickly silenced by their pricy lawyers and no media seems to exist to expose the wickedness of their ways.

Until now.

The wide webs of the world have made it possible for the little guy to raise his or her voice.

Obviously things are not well at McDonald’s these days and we hope that the Franchisees will continue to stay noisy about it which will help prevent new stores from opening so fast and force leadership to start caring about the financial well-being of their number one partner – their Franchisees.

Is McDonald’s Bad for Choosing Foreign Workers Over Canadians?

Is McDonalds bad or evil for hiring Foreign workers over Canadians?

The topic of hiring foreign workers for more ‘challenging’ work is not new.  For once we see a reputable brand in the spotlight so it becomes more of an issue.  In this case, a McDonalds franchise.

There is an attempt taking place to shape the opinion of the working class Canadian’s perspective (the one with the loudest voice), so that they view these kind of companies as slave-driving, economy-killing capitalists with no concern for the welfare of their own country.  There is no doubt that bad capitalists exist in every capitalist region.  But where are these voices coming from?  Before these articles were published did you feel this way towards Clown Food?  Perhaps, though, there is another side to this story – an untold side – a side not favoured by the media because it just doesn’t have as much curb appeal.  Perhaps there are other reasons why franchises (and other businesses) are choosing to hire foreign workers, and perhaps it’s time to take a step back and truly analyze some bigger issues.

Before suggesting that McDonalds is without guilt, allow us to first state that equality is always the best whenever possible.  It’s always wonderful to put our judgements aside and look at each and every person as precious gems of potential and greatness regardless of sex, race, age, and physical strength.  Now that we’ve travelled to Utopia, welcome back to Reality – a place where every last one of us is full of judgements towards each other based on a lifetime of repeated (and often negative) experiences.

It’s true that the Canadian government has facilitated the process of helping internationals move to and work in Canada.  Have you ever stopped to think of why that is?  There was actually a problem where companies were unable to find enough people to work certain jobs – usually the jobs Canadians didn’t want.  So problem number one: Canadians not willing or able to work certain jobs in certain regions.  Solution?  Foreign workers.  Problem solved and the Canadian economy can continue.

One story I had the pleasure of hearing a few weeks ago helped highlight another problem.  A very well qualified gentleman from Dubai who spent his entire working life in hospitality and who spoke with a refined elegance told me his story of how he was unable to find work in hotels because he was not ‘qualified’ in Canada.  Ever heard such a story?  How about surgeons from China unable to find meaningful work in Canada? In fact, the certification process (perhaps better called ‘filtration process’) is such that a teacher from one province may not be able to teach in a different province until they complete the education course.  If you were the hiring manager for a restaurant kitchen and this gentleman came humbly to apply for work, would you consider him?  And we wonder why there are so many foreign workers at Clown Food.  The voice of the media is very loud and influential though.  This story doesn’t stir as much locker room chat as slave-driving capitalist dogs with sharp teeth who crack the whip on the backs of foreign workers (who often have extensive but useless university degrees).

From a different angle, many foreign workers are coming from places where they are really hard up where working at a burger joint is a true blessing from heaven and mopping the floor in a restaurant is a miracle and the pay is great for them and their families back home.  If you were the hiring manager of a kitchen, and you heard this story, would you consider hiring them?

Of course you are thinking ‘that’s fine for an oil field in the north but why is this Clown Food Inc where my son applied for weekend work not hiring him?”  You slam your fist on the table. “The foreign workers have done this to my son! They have taken his job!  And the Canadian government encouraged them!”  You call the media.  You demand justice for this act of judgement against Canadians.  But wait.  There is a second problem that exists in fast food, coffee shops, restaurants, and anywhere else where paying more than minimum wage makes business nearly impossible: the lack of reliable hard-working staff.

Canada has a major problem and it’s called ‘work ethic’.  Until you surround yourself with small business owners, you remain in a cocoon bliss where these kind of articles make you think that all chains are exploiting foreign workers while robbing jobs from Canadians.  The statistics probably support this view.  After several long conversations with business owners, however, you find that local Canadians often lack one very important aspect for working: a good work ethic.  The following list of problems reoccur in almost every conversation with a small business owner, especially in the retail sector, namely the food and beverage industry:

  • showing up late
  • not showing up at all
  • slacking while on the job
  • expecting an unreasonably high compensation for the job
  • leaving for a ‘better’ job with little or no notice
  • theft
  • and more

Are foreign workers capable of the same problems?  You better believe it. Humans are amazingly similar across the globe.  However, a person who *appreciates* the employment they have will tend to show a reduction in the items above because losing their job would result in greater damage.  For the average Canadian, these kind of jobs are not considered ‘real employment’ in their minds.  Ask yourself honestly under what circumstance you would work at McDonald’s and you’d probably agree that it would either be a first job, or a fill in job.  And for that reason the compensation is set up accordingly.

Through the process of opening up Canadian jobs to the foreign market, companies have discovered that they also have a better potential of retaining the staff who cost them large amounts of money to train.  If improved employee retention alone were the only benefit, it is surprising that more companies are not lining up to hire foreign workers.  The headaches and money involved in re-hiring and training new staff is incalculable.  We have heard several small business owners make comments like “I’m done with Canadians” or “Here’s my advice: don’t hire Canadians.”  This is a shameful situation, no question, and one that is not often discussed for fear of appearing sinister.  The sense of entitlement amongst Canadian-born citizens has reached an epidemic level in Canada and it is now coming crashing down on our heads.

The quickest way to fix the problem discussed in this article above is to train our youth to get a job, do well on the job, and keep it come hell or high water.  It starts at home.  Another solution is to start a great business and create jobs for the Canadians you wish to see working.

Although it’s important to expose abusive behaviour (we at the VCSFA believe firmly in this) it’s also important to make sure that you understand the agenda(s) of the people who are creating the buzz (the media) around these topics and make sure you get both sides to the story.

 

How a Burger Franchise Used Coffee to Revive Its Brand

First, thanks to @coffeetalkmag for always tweeting such quality articles.  A recently tweeted article was of high relevance to anyone involved in franchising, especially coffee.

This article is important because it highlights:

  • strategy by the Franchisor
  • importance of coffee to Canadians
  • effort and action by the Franchisor to protect the brand
  • effort and action by the Franchisor to improve the brand
  • effort and action by the Franchisor to reinvent the offering to match the market
  • implementation of a leader who was able and willing to lead
  • the results of the free coffee program – which hurt lots of other local coffee shops was as follows:

    Of the operators who gave it away for free, some of them were up 30-40% in the morning. Guest counts were up 40 or 50%.

In short, as a Franchisor, they came to bat and hit a home run.

If you are a Franchisee in a coffee franchise and don’t have eggs and burgers to sell, you better evaluate quickly how your Franchisor weighs up.

As always, don’t hesitate to contact us.  We are here to help.

 

Business in Vancouver’s Biggest BC Franchise List – A Coffee Perspective

This list was published by Business in Vancouver not that long ago and deserves some attention.  First of all, we commend Business in Vancouver for putting together lists like these and for gathering data as it’s very useful for the public, especially the potential buyer of a coffee shop franchise.

Here are some pieces of information that we pulled out of this related to coffee, but first, please familiarize yourself with the VCSFA’s exhaustive Francouver. (Franchises in Vancouver) page.

1. Out of 80 franchises, only 6 are coffee.  That’s only 7.5% of all franchises in the list – pretty low numbers, I thought, actually.  And is Tim Horton’s really a ‘coffee franchise’ or is it a ‘food franchise’?  That discussion is up for debate.  We will give them the benefit of the doubt as well as add McDonalds to our Francouver list since it’s not there at the time of writing this article.

Here is the list with our running commentary:

#2 Tim Horton’s: Not much to say here except I’d be carefully watching the golden arches if I were them

#3 McDonalds: They are definitely into coffee now and much better in fact, than many of their competitors – they are in a new game now and I would not be surprised to see them start to seriously eat away at #2’s coffee share.

#13 Blenz: Sheer numbers.  They were cranking out new locations until about two years ago when everything seemed to come to a grinding halt.  Economy?  Other?

#39 Waves Coffee: Very similar situation to Blenz the way they were cranking out new stores. In fact, they may have out-cranked Blenz this year… I’d like to see those stats. Waves may be heading into other provinces to crank further whereas Blenz doesn’t seem to be doing much with North America.  Let’s see where these numbers sit between Blenz and Waves next year.  They are, if you didn’t know, rivals to say the least.  We will hopefully publish that story one day but feel free to dig in yourself. It’s very interesting!  We’ll leave that for a rainy day which will likely be soon. And, apparently another Vancouver coffee franchise will be joining this story in based on some new announcements from one of these chains.

#62 Esquires: They are huge elsewhere but I was actually impressed with their footprint here (respectable numbers!)

#65 Second Cup: Still hanging in there with their Ontario fanclub.  Not much expansion in BC but apparently heading quickly into the states.

Notes for Potential Buyers

From our experience in the coffee shop franchise arena, there is a small guage that is worth looking at on this list that would likely go unnoticed. You’ll note that there is a column for ‘number of locations’ and then ‘number of franchises’.  Typically speaking you would be looking for the number to be the same and that would indicate a better health.  You should not see the gap between the number growing and if you do, you would want to ask why.  Typcially what is happening is the owner of the store is going bankrupt, or, they have been forced out by the head office and they are running it.  We would very much welcome our readers to email us your comments as I think this would make a good discussion.  For now, however, we would recommend considering a fluctuating number here to be an indication that you should ask more questions about the health of the chain. Here is how those numbers look:

#2 Tim Horton’s: 289/289

#3 McDonalds: 166/207

#13 Blenz: 62/64

#39 Waves Coffee: 24/24

#62 Esquires: NP (Not Provided!)/12

#65 Second Cup: NP (Not Provided!) / 9

We would be concerned about a ‘not provided’ answer.

We would recommend monitoring the number of locations from one year the next and especially keep an eye on that gap mentioned above from one year to the next.  If you see an increase in the gap you know that head office has taken over another store and you would want to investigate why from both sides.

We hope this coffee shop franchise perspective on this famous list was useful and don’t forget that we always welcome you to email us with your feedback.