Why Unauthorized Products and Suppliers Create Problems In Franchise Systems

Consistency and uniformity across franchise systems builds trust with consumers, ultimately determining a brand’s success.

By Cassidy McAloonSenior Writer

SPONSORED 2:14PM • 06/02/16

The franchising industry gives entrepreneurs across the country a unique business opportunity that can’t be found anywhere else. When franchisees invest in a brand, they’re able to go into business for themselves while having the backing of a strong and established company at the same time. Part of what makes that brand recognition and reputation possible is a franchisors’ commitment to specific vendors and suppliers across its entire system.

By relying on the same products at every local franchise location, brands are able to ensure quality and safety for their customers. Franchisors often decide to work with specific vendors because they’re trusted among consumers and create a level of familiarity that customers can rely on.

“Ultimately, entrepreneurs buy into franchises because they gain the reputation associated with a brand name,” said Beth Caron, director of franchise development for Great Clips*. “When local franchisees turn to outside or unapproved sources for even the littlest things, it dilutes the entire system.”

That dilution is damaging to not just individual franchise units, but to the entire brand as a whole. Brands are only successful when they establish trust with their consumers. When that trust is broken through a bad experience or unexpected change in products, franchises lose business.

According to the International Franchise Association, “Supplier selection decisions made by franchisor executives normally have repercussions that are far greater than similar decisions made by executives in non-franchising companies of the same size. That is because the selection of an approved product, an insurance program, advertising or financial institution can significantly affect the profitability and opportunity of numerous businesses operated by franchisees, as well as the economic stability of their employees, suppliers and creditors in addition to the business of the franchisor.”

Uniformity and consistency are also essential for franchisors that negotiate specific deals with their go-to vendors and suppliers. When brands commit to ordering a large amount of a certain product, they’re able to get the best possible prices for their franchisees. When local owners step outside of those relationships and break the rules associated with them, they run the risk of disrupting deals that are meant to save them money.

“For any franchise brand, consistency is the key to success,” said Samir Wattar, vice president of operations for MOOYAH Burgers, Fries & Shakes*. “Reputations aren’t just built on local levels, they’re system-wide. That means customers should be able to dine at a franchise in any state and experience the same level of quality. When a brand loses consistency, it’s a sure sign that a downturn is about to take place.”

*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.